ATO Deputy Commissioner, Mark Konza, has delivered a speech providing an insight into the base erosion and profit shifting (BEPS) Action Items that were discussed at the recent G20 Finance Ministers meeting held in Cairns. In particular, Mr Konza focused on the implications of the proposals, the ATO’s priorities and strategy, and the compliance action being implemented in response.
In relation to the tax challenges of the digital economy, Mr Konza said the intelligence the ATO has gained through an E-Commerce project has been used as a basis to instigate a multilateral working party, with 5 tax agencies coming together to investigate the global tax planning of e-commerce multinational enterprises. He said work is currently underway to undertake joint compliance action between several jurisdictions where appropriate.
Mr Konza also discussed the effects of hybrid mismatch arrangements. He said the ATO was currently seeking feedback from its operations teams to identify and consolidate examples of hybrid mismatch in order to establish the level of risk, before identifying any potential action required. Mr Konza said any recommendations made dealing with hybrid mismatch arrangements will need to be considered in light of work already underway in Australia on related anti-avoidance measures.
In relation to transfer pricing of intangibles, Mr Konza said the ATO supports the OECD’s stance against artificial profit shifting to no or very low tax jurisdictions, mainly where there is a separation between the location of the return on the intangible and the location where the economic activities take place and value is created. However, he said any Governmental consideration of law change would be in the context of new transfer pricing laws under Div 815 of the ITAA 1997 which have already been enacted.
[LTN 186, 25/9/14]