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PERTH (miningweekly.com) – The Australian government plans to institute anti-avoidance legislation against multinational companies, Treasurer Joe Hockey announced on Tuesday ahead of his Budget speech later in the evening.
Hockey stated that the anti-avoidance law would deal with 30 identified multinational companies, which were diverting profits earned in Australia away from Australia to no, or low tax, jurisdictions.
The issue of tax avoidance made headlines in the resources industry last month, after the Australian Taxation Office (ATO) investigated majors BHP Billiton and Rio Tinto for channelling billions in profits from the sale of Australian iron-ore through their Singapore marketing companies.
It was estimated that the companies saved more than A$750-million a year in taxes.
“After months of the ATO being embedded in these businesses we now have a better understanding of how these companies have used contrived or artificial tax arrangements such as the much publicised ‘Double Irish Dutch Sandwich’,” Hockey said.
“These contrived and very complicated arrangements have been used to avoid paying Australian tax.”
The Treasurer noted that legislation to strengthen Australia’s anti-avoidance regime would be introduced with the federal Budget on Tuesday evening.
“If we strengthen our own anti-avoidance laws to ensure the ATO has the powers to see through these contrived arrangements, then we will be able to recover the tax that should be paid in Australia.
“The Tax Commissioner will have the power to recover unpaid taxes and issue a fine of an additional 100% of unpaid taxes plus interest.”
Hockey told a press briefing that the starting point for the new legislation would be January 1 next year, with the changed legislation expected to deliver ‘billions’ in federal revenue.