Stemming the tax avoidance tide

Commentary around the ATO not being on top of tax avoidance issues shows a complete lack of understanding by some observers  according to the Institute of Public Accountants (IPA).

“Focussing on the effective marginal tax rates is misguided unless observers understand the complex nature of income tax rules,” said IPA chief executive officer, Andrew Conway.

“Australia has very strong anti-avoidance rules in place to stop abuse.

“We commend the ATO for their efforts in this area including current compliance activities.  The ATO has had a special task force on the case for quite some time.

“The fact is that our current tax rules are inadequate to deal with the digital economy; a key driver for the G20 to be discussing global tax rules to address these worldwide issues that face most advanced economies.

“Australia is better equipped than other countries to deal with these head winds as it has well developed integrity rules.

“While our corporate tax rate remains uncompetitive, the incentive to shift profits legally remains strong and this must be addressed in the short term while we await long term global solutions; one nation on its own cannot stem the tide.

“Countries operating unilaterally is not a good option hence emphasis on the G20 to come up with some equitable solutions to stem aggressive tax avoidance by global giants.

“There is already a push for improved transparency between countries to disclose how much tax is actually being paid around the world by global entities such as Google and Apple.

“Increased transparency will put global companies under the microscope and subject to greater scrutiny by the regulators and the public. This over time may change behaviours as corporate entities may not want to be labelled tax dodgers; a label that may detrimentally impact their reputation.

“New initiatives need to be devised to cease the trend of global companies setting up aggressive tax structures in low tax jurisdictions,” said Mr Conway.