On 12 June 2014 the Commissioner of Taxation, Chris Jordan, gave an address to the Institute of Chartered Accountants Australia (ICAA) Practice Forum 2014 in Sydney.
The Commissioner spoke about building trust and confidence, reinventing the ATO, the ATO’s new mission vision and values, keeping promises and demonstrating quick wins, and influencing policy and law design.
On international tax matters, the Commissioner said this:
“While large Multinational Enterprises (MNEs) in the digital space have had high profiles in the media, our compliance checks have indicated potential BEPS [Base Erosion and Profit Shifting] risks in a wide range of businesses such as small internet businesses and even brick and mortar businesses locating automated activities on offshore servers. We have also turned our attention to other industries that use marketing or service hubs.
We are focusing on companies that indicated in their international dealings schedule that they have undertaken an international business restructure or have significant related party cross-border arrangements. Our focus includes:
- business restructures like digital duplication of domestic business to shift profits to a low tax jurisdiction
- IT companies with low domestic tax and large ‘stateless income’
- pricing mismatches, with large mark-ups ending up in an offshore ‘services’ hub
- the alienation of intangibles at ‘non arms-length’ prices
- debt dumping into Australia, sometimes involving inflated asset valuations to provide a façade of compliance with thin capitalisation safe harbours.”
For the full text of the Commissioner’s address go here.