The Government on Wed 24.7.2013, released a Treasury scoping paper examining the risks to the sustainability of Australia’s corporate tax base. Assistant Treasurer David Bradbury said the paper “represents an important piece of analysis, framing the challenges to Australia’s corporate tax system both in terms of our own history and in the broader international context”.
Mr Bradbury said “a principal recommendation of the paper and a key plank in global cooperation to tackle base erosion and profit shifting is the endorsement of the recently released OECD Action Plan”. Although noting, among other things, the “generally strong compliance culture in Australian business”, Mr Bradbury said the paper “finds that the rapid and dramatic shifts in global economic activity, driven largely by e-commerce, pose very real and significant risks to Australia’s corporate tax base and the tax bases of countries right around the world”.
The paper made the following 4 recommendations:
- Recommendation 1: (a) The current public release of taxation statistics should be expanded to better cover international dealings of multinational enterprises. (b) An annual report on the health of the business tax system should be published. Key Government response: The Government said it supports efforts to enhance public awareness of taxation issues and has a strong record in this area.
- Recommendation 2: Each of Australia’s bilateral tax treaties should be reviewed at least once a decade, in order to ensure that they continue to be in the national interest. Key Government response: The Government said it will consider this recommendation having regard to existing treaty policies and practices.
- Recommendation 3: Australia should consider exploring options to further improve the way tax authorities work together including through expanded and more timely exchange of information for tax purposes. Key Government response: The Government recently announced that it would join a pilot for the multilateral automatic exchange of taxpayer information, which will help Australia and other countries fight international tax evasion.
- Recommendation 4: Australia should endorse the Action Plan which establishes a joint OECD and G20 project with a comprehensive work program to address the key drivers of base erosion and profit shifting. Key Government response:The Government said it supports multilateral efforts to address base erosion and profit shifting and notes that the OECD Action Plan was supported at the recent G20 Finance Minister’s meeting in Moscow.
Source: Assistant Treasurer’s media release No 139, 24 July 2013
[LTN 141, 24/7/13]