At The Tax Institute’s 2013 National Convention in Perth on Fri 15.3.2013, the Assistant Treasurer gave a speech on the Government’s attempts to counter profit shifting and international tax avoidance.
He said that, left unchecked, profit shifting and international tax avoidance was “a threat to our sovereign right to tax and to raise the revenue necessary to provide the public goods and services our society requires”. The Assistant Treasurer expanded on a speech he gave in November 2012 where he outlined an arrangement called the “Double Irish Dutch Sandwich” tax planning structure purportedly used by some multinationals.
Points he made in his Tax Institute address included:
- Stateless income is income that is not taxed in the source country of the production factors that gave rise to the income – nor is it taxed in the ultimate parent company’s jurisdiction. Put another way, Mr Bradbury said stateless income is income that doesn’t belong anywhere for tax purposes.
- In Mr Bradbury’s view, no-one should underestimate the challenge this presents to the international tax system “as well as the concept of statehood and national sovereignty”.
- Mr Bradbury recounted the Full Federal Court decision in FCT v Noza Holdings Pty Ltd (2012) 82 ATR 567 “to illustrate the flexibility that a multinational group has in arranging their capital structure, and the ability this provides to exploit tax arbitrage opportunities”. While he acknowledged that tax advisers would say they are just doing their job of minimising their client’s tax according to the law, Mr Bradbury said he was “making a fundamentally different point – if this is the kind of behaviour the international tax system encourages, then it needs to be changed”.
Source: Assistant Treasurer’s address to The Tax Institute 28th National Convention, Perth, 15 March 2013
[LTN 51, 15/3/13]