Simply
put, the Australian multi-agency Tax
Avoidance Taskforce has
the
role of ensuring
multinationals and large businesses pay the right tax.
It
can sometimes take decades to induce multinationals and foreign-owned
businesses to admit additional tax liability and legal battles have
been known to go all the way to the High Court – repeatedly
in the case of at least one corporation.
However there are now runs on the board.
In
November
2018
ATO persistence saw the
nominally Australian-based multinational
BHP Group Ltd
settle
their longstanding transfer
pricing dispute
over the amount of Australian tax payable as a result of BHP’s
Australian commodities sales through its Singapore marketing
business. The agreed amount was calculated as approx.
AU$529
million in additional taxes for the income years 2003 to 2018.
In
December
2019
the ATO announced that it had managed to retrieve an extra
$481.5 million in taxes
from Google Australia
after an audit investigated its tax practices between 2008 and 2018
and,
that it joined the likes of Microsoft, Apple and
Facebook who have all publicly stated that they have settled their
tax affairs with the ATO and we welcome their transparency. This
result brings the increased collections made against taxpayers in the
ecommerce industry to around $1.25 billion cash.
Apple
Australia
reportedly owed
$28.5 million in back taxes
when
it received the ATO bill in 2012.
While
Microsoft
in
Australia is said to have paid
AU$39 million during the 2017 financial year to settle its
outstanding tax bill.
U.S.
multinational Facebook Inc.
was obliged to meet
a bill of AU$31.3 million in additional taxes
reaching as far back as 2009 according to one media report.
In
October 2021 U.S. based ResMed Inc.
annnounced it had settled its tax dispute with the ATO
for
the
equivalent of US$381.7 million and locked in future tax certainty.
Then
came this announcement concerning a mining corporation which asserts that half its assets are situated in Australia…...
Australian
Taxation Office
(ATO), media
release,
20 July 2022:
The
Australian Taxation Office (ATO) can confirm a settlement has been
reached with Rio Tinto Ltd (Rio). The settlement brings an end to all
tax disputes including long standing disputes in relation to Rio’s
Singapore marketing hub. The settlement brings Rio’s total payment
in relation to the disputes to almost $1 billion.
Deputy
Commissioner Rebecca Saint said that the settlement represented one
of the largest settlements in Australia’s tax history.
“This
settlement is a very good outcome for the Australian tax system,”
Ms Saint said.
“Even
prior to this settlement, Rio has been one of Australia’s largest
payers of income tax for many years, with a strong track record of
engaging with the ATO in relation to its tax affairs, albeit with
some areas of dispute.
“Rio
have announced that the settlement agreed to has secured
approximately $1 billion for the Australian community for past years,
over and above their tax returns originally filed. Perhaps more
importantly, the settlement locks in future tax outcomes, providing
certainty going forward.
“This
means that additional profits from the sale of Rio’s Australian
owned commodities will be taxed in Australia in the years to come.
“The
resolution of these matters means that ordinary Australians can have
confidence that even the biggest companies are held to account to pay
their tax due,” Ms Saint said.
“This
result was delivered through the expertise of the ATO’s Tax
Avoidance Taskforce. Many ATO staff have worked for the best part of
a decade on these audits to deliver an outcome for the Australian
community that strengthens the tax system.”
The
compliance programs funded by the Tax Avoidance Taskforce, together
with robust tax laws provide an important foundation for the ATO to
be able to scrutinise activities to address multinational tax
avoidance, often involving investigations over many years.
“This
settlement reinforces the importance of Australia’s world leading
anti-transfer mispricing rules and a tax administrator properly
resourced with the capabilities to deal with this type of dispute.
The complexity of properly understanding the global affairs of
multinationals, and the true drivers of profitability, can take years
of rigorous investigation. This is the case even when the
multinational is fully engaged, shares information and is motivated
to resolve the issue, such as with this settlement.”
The
broader impact of the Taskforce in the market has been to reduce the
proliferation of profit shifting and transfer mispricing. ATO
intervention has resulted in taxpayers shifting their tax position
and increasing their revenues being taxable in Australia.
The
Tax Avoidance Taskforce has a focus on the energy and resources
sector, including commodity exports and marketing hub arrangements.
“The
Rio settlement follows the announcement by BHP in November 2018 that
they had settled their marketing hub dispute with the ATO. These
announcements provide confidence that Australia’s largest iron ore
exporters are meeting their income tax obligations and that profit is
being retained in Australia,” Ms Saint said.
As
of 30 April 2022, the Tax Avoidance Taskforce has helped the ATO
raise $26.3 billion in tax liabilities and collect $14.9 billion in
cash.
“Australia
has one of the best tax performance rates in the world overall, but
in particular in the large market. The success of the Tax Avoidance
Taskforce has helped us ensure that compliance rates in the large
market have reached 92% of tax paid voluntarily, and 96% after
compliance activities.” Ms Saint said.
Background
Details
of the settlement are covered by confidentiality provisions and the
tax secrecy requirements of the taxation law. However, all our large
corporate settlements are reviewed by former Federal Court judges to
ensure a fair and reasonable outcome for the Australian community.
ATO
settlement practices are subject to significant external scrutiny,
with the Australian National Audit Office (ANAO) finding that our
practices are effective. The ANAO also indicated we have more
transparency over large market settlements than any other
jurisdiction.
The
efforts of the Taskforce have seen several significant taxpayers
publicly state that they have settled their affairs with the ATO,
promoting unprecedented transparency. This includes the likes of
Google, BHP, Apple, ResMed, and Microsoft.