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Multinationals & Tax

Discussion in 'Accounting & Tax' started by Redwing, 17th Aug, 2015.

  1. Redwing

    Redwing Well-Known Member

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    This seems to be topical at present, not sure if all is true, but it's interesting none the less

    EXCLUSIVE: $31BN SENT OFFSHORE TO AVOID TAX

    A 29-year-old accountant and father-to-be is facing jail for for lifting the lid on a global tax rort worth trillions, including $31 billion in Australia.

    It was in the spur of the moment decision when Antoine Deltour walked out of his dream job in Luxembourg armed with 28,000 documents he had secretly downloaded from his employer PriceWaterhouse Coopers.

    These included confidential agreements between huge multinationals and Luxembourg - which is a tax haven - and exposed the true scale of the complex and secret web of international tax avoidance.

    The bombshell dropped by Deltour has led all the way back to Australia, with fresh revelations that in just one year, 10 companies operating in Australia shifted $31 billion to Singapore where they paid hardly any tax.

    The Australian government launched a parliamentary inquiry into the alleged tax evasion and the inquiry’s interim report, to be released August 17, recommends the Government publicly names and shames companies that duck tax by shifting profits overseas.


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    ATO looks into Chevron, ExxonMobil and Shell's $60b tax-free windfall

    The Australian Taxation Office is investigating funding payments for the landmark Gorgon natural gas project that will deliver estimated tax-free profits of more than $60 billion to partners Chevron, ExxonMobil and Shell over the life of the development.

    The three partners book almost $3 billion in profits a year tax free, by charging their Australian arms for related-party loans at more than 10 times the interest rate that the majors paid to third-party lenders in the United States.

    The energy giants were already a target of the Senate inquiry into corporate tax avoidance, chaired by Senator Sam Dastyari. That inquiry on Monday would file an interim report which was understood to recommend new transparency measures, including public reporting of large tax audits and settlements, a new mandatory tax reporting code for all large companies, and public release of excerpts from confidential country-by-country reporting by multinationals.


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    Energy giants called to explain billions in tax havens

    Read more:

    ATO alleges complex Chevron scheme slashed tax bill by $258m

    Read more:

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    Nothing dubious in Big Tobacco's tax records

    Over four years, Fairfax Media has investigated the accounts of multinationals operating here: the new breed of global digital companies such as Google, Apple, Facebook, eBay and PayPal, resources giants such as Glencore, Rupert Murdoch's media empire News Ltd, betting behemoth William Hill, services juggernauts Serco and G4S, oil giants Chevron and Shell, and major drug companies, including Pfizer.

    They show an alarming failure to comply with accounting standards (and therefore the Corporations Act), and a failure to deliver financial accounts devoid of dubious tax schemes such as large and uncommercial payments to related companies overseas.

    In contrast, the cigarette manufacturers are pulling their weight. The most often reviled of these is Philip Morris, which is suing Australia in a Hong Kong court over its successful plain packaging laws, at a legal cost to taxpayers here estimated at $50 million.


    Read more:
     
  2. Redwing

    Redwing Well-Known Member

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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Previously known as 'transfer pricing policy'.

    Purchase from your own/related company offshore company (located in a tax haven) at full retail price or more. Sell it in Oz at the same price or less. Lose money here, claim that loss. Rake in $billions in the tax haven & pay zero tax.

    Tax haven collects income tax
     
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  4. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    Correct scott under OECD transfer pricing rules could be quite legal. Main issue is you need a permanent establishment in the tax haven or low tax jurisdiction for it to work. That isnt cheap to setup and run and for most small business operators wouldnt be worth doing.

    Quite ironic that the employee has an issue with multinationals potentially committing a crime ie tax evasion but he has no problem with comitting mutiple crimes such as stealing privacy records, disclosing such records, breaching his employment contract, etc. why should multinationals be brought to justice when he obviously doesnt believe in the rule of law.
     
    Last edited: 17th Aug, 2015
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The alleged PWC documents are one of several batches that have been handed to foreign tax agencies. The US IRS shares the whitleblower in a cut of the tax take !! A major swiss one netted one person with a tidy sum in the millions. Questions will need to be determined if its illegal or legally obtained. Courts may just throw it all out if it was stolen.

    What this issue creates is a smoking gun. Nobody can be identified to have died or to have used the gun. All we have is a gun that the media tells us has been used. As Mike says TP isn't illegal. The methodology and arrangement and the pricing basis needs to be tested by the ATO and other agencies. Seeking tax advice is a normal aspect of businesses. The concern will be when any are found to have created a scheme to avoid tax or to shift profits that does not comply.

    Don't believe everything in media. And very few politicians are tax experts too. Sam Daystayri probably cant prepare and lodge his own I return so what would he know about TP ?
     
  6. Ed Barton

    Ed Barton Well-Known Member

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    If I'm leaving the country do you suggest a Hogan style disguise?
     
  7. Redwing

    Redwing Well-Known Member

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    Apple, Google,Chevron and the pharmaceutical industry are all being looked at, Australia is not the Lone Ranger with these tax issues though.
     
  8. jim1964

    jim1964 Well-Known Member Premium Member

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    I saw that story...........what a eye opener.The ATO will surely close the loop holes which allow this to happen, if you were a smart?? politician or senior ATO executive, you would become a national hero clawing the money to pay tax here.
     
  9. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    It isnt a loophole at all. Its part of being in a global economy. Governments around the world are struggling how to tax things now that companies have offshore teams in the philippines taking calls, developers in india, intellectual property and loan financing companies held in singapore, etc.

    Just make it simple. Scrap income taxes at the corporate and individual level and increase the GST to 20%. Watch as foreign capital would flow into australia. Companies would be setting up here from around the world. If the tax rate was zero it would hardly impact the major multinationals anyway but watch as hedge funds would call australia home as the country is stable and safe. The finance industry would be bigger than london, singapore or new york.

    More staff in australia needed for those companies and more spending. But i doubt any government would try it.

    Unfortunately politicians dont think outside the box so they call it closing a loophole. Like regulating uber. Get over it. Its a new world so think outside of the box.
     
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  10. Redwing

    Redwing Well-Known Member

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    It's the Global Village and everyone's playing "catch up". “It can't happen here" is up near the top on the list of famous last words.
    • Uber, the world’s largest taxi company, owns no vehicles.
    • Facebook, the world’s most popular media owner, creates no content.
    • Alibaba, the most valuable retailer, has no inventory.
    • Airbnb, the world’s largest accommodation provider, owns no real estate.
    May you live in interesting times indeed
     
  11. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    McDonalds sells more meals than any other entity - But it doesn't sell food.
    .
     
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