The Assistant Treasurer, Kelly O’Dwyer, told The Guardian about various Government initiatives, including a proposal to create a ‘public register of the beneficial owners of shell companies”.
[LTN 76, 22/4/16]
Guardian report
The Turnbull government will create a public register revealing the identities of the beneficial owners of shell companies in an effort to quell mounting public outrage about multinational tax avoidance in the countdown to the federal election. [Why only ‘shell’ companies – and what are they anyway? Contrast the UK announcement (see link below) to create a register of ‘companies’ – which sounds like ‘all’ companies.]
The creation of the register will bring Australia into line with G20 commitments on transparency. It will be announced within weeks ahead of an international tax avoidance and evasion summit convened by the UK prime minister, David Cameron, in London in mid-May.
The assistant treasurer, Kelly O’Dwyer, said: “We agree there needs to be a registry of beneficial ownership in our country.” “It does improve transparency. It means that the public and law enforcement agencies know who ultimately controls the company. It means it is a lot easier to expose wrongdoing or fraudulent conduct. It make it much easier to disrupt illicit financial flows and it makes it much, much harder to engage in tax avoidance.”
The government’s move comes in the wake of revelations in the Panama Papers that more than 800 Australians were on the files of Panama–based law firm Mossack Fonseca – and amid a strong voter backlash about businesses not contributing their fair share of tax.
The UK government will require the disclosure of the beneficial owners of companies in a public register from June, despite complaints from British business. The move by the Turnbull government is also unlikely to be popular with big business in Australia.
O’Dwyer said Australia’s corporate watchdog, Asic, had trace powers to establish the identity of beneficial owners but the current system was “clunky”.
She told Guardian Australia it was “critical that we ensure the integrity of our tax base in Australia and we know we have to cooperate with international jurisdictions in order to properly achieve that aim”.
The assistant treasurer also flagged stronger actions if “non-compliant jurisdictions” refused to sign up to G20 standards on tax transparency. “We certainly agree that further action should be taken by the international community if they do not do that,” she said. O’Dwyer declined to specify what stronger action might mean but there have been widespread calls to outlaw shell companies or to apply sanctions to countries that refuse to take action.
With Labor campaigning vociferously ahead of the imminent election on the theme of making business pay their fair share, the government is expected to use the looming budget to pursue a second round of multinational tax avoidance measures.
There have been reports the government is contemplating another round of changes to thin capitalisation rules, making it harder for multinationals to load debt into their Australian operations.
The assistant treasurer also pointed to more aggressive enforcement activity accompanying policy changes. She said the head of the Australian Taxation Office, Chris Jordan, had made his intentions clear in recent months. “We are not going to be treating all taxpayers with the same level of patience when the taxation office requests information,” O’Dwyer said. The ATO has said, ‘now we are going to be very tough on you, we are going to raise assessments on you’.”
During an appearance before a Senate committee on Thursday, Jordan noted that the now-infamous law firm at the centre of the Panama Papers leak was not a “one off”. The tax commissioner said there were dozens of other firms running similar operations around the world. He also said Mossack Fonseca hadn’t just been used for tax minimisation strategies – it had been used to conceal and aid criminal behaviour too.