Tech giants to face tax scrutiny under new law

Companies with annual incomes of more than $100 million will have data from their tax filings made public by the Tax Commissioner under new legislation passed today.

The Tax Laws Amendment (2013 Measures No.2) Bill 2013 was introduced into the House of Representatives in late May, passed by the lower house in early June, and made its way into law on the final Senate sitting day today before the federal election.

The new laws are expected to impact up to 2000 companies with operations in Australia. 

Under Schedule 5 of the legislation, the Tax Commissioner will be given power to publish limited information about the tax affairs of large corporates, including periodic aggregate tax collection information. 

That information includes the total income for the year, the taxable income, and the income tax payable for the period. The laws will apply from the 2013-14 income year. 

The Bill also requires large entities with annual income of more than $100 million to pay tax instalments monthly rather than quarterly or annually, and allows government agencies to share information relating to foreign acquisitions and investments affecting Australia.

The introduction of the bill was spurred by growing concern about the behaviour of companies such as Apple and Google that have been criticised for their use of complicated tax structures in order to limit the amount of tax paid in higher-taxing countries such as Australia. 

Apple paid $40 million in Australian tax in 2011, despite achieving record revenues of $6 billion. Google was reported to have paid $74,176 in tax off $201 million in revenue - a figure later disputed by the company which claimed its tax bill was closer to $781,471.

The Government approached the wider public earlier this year to seek confirmation on its findings that companies with Australian operations aren’t paying enough tax. The Treasury Department said Australian companies had been paying around 27 cents per dollar of profit compared to the statutory rate of 30 cents per dollar since the onset of the GFC. 

The agency said compared to other countries, Australia's corporate tax collections had "fallen by more and recovered by less" since the GFC began, with the financial crisis bringing the complex tax structures of multinationals to light, thanks to its enduring effect on tax revenues of governments the world over.

Use of the “Double Irish Dutch Sandwich” method was singled out. The arrangement involves a corporate entity shifting income from a higher-taxing country to a lower tax one which uses a territorial rather than worldwide tax approach. 

Liberal MP Matthias Cormann attempted to filibuster the measure, which was grouped in with two other amendments to tax law, speaking for 25 minutes and criticising the Government for attempting to push through the bills in half an hour without proper debate. He called the bills "bad" and "inadequately scrutinised".

Cormann attempted to amend the legislation to remove Schedule 5 but was voted down.

Several MPs, including Independent Nick Xenophon and Liberal David Fawcett, were similarly critical of the 55 bills that have so far been passed into law by the Senate this week, in the government’s “dying days”, according to Fawcett.

Xenophon said the ramming through of bills was a “disgrace” and “disgusting”. He gave the tax bills his support but said they needed to be further reviewed.

“Yet again we have another bill that’s going to be rammed through without adequate scrutiny. It is absolutely appalling that the house of review is being reduced to a rubber stamp. For goodness sakes let’s never do this again.”