The Tax Institute welcomes the opportunity to make a submission to the Treasury in relation to the Government election commitments: Multinational tax integrity and enhanced tax transparency consultation paper, August 2022 (Consultation Paper).
We thank the Treasury for meeting with representatives of The Tax Institute to discuss the proposed measures and matters canvased in the Consultation Paper.
In the development of this submission, we have closely consulted with our Large Business and International Technical Committee and members with international tax expertise to prepare a considered response which represents the views of the broader membership of The Tax Institute.
The Tax Institute is broadly supportive of the policy intent to target tax avoidance by multinationals and considers that all taxpayers should pay their appropriate share of tax.
However, we note that multinationals are subject to a wide range of anti-avoidance and integrity measures and that the large business income tax gap is one of the smallest tax gaps.
This data indicates that there are bigger issues in the system and the priority should be the improvement of the tax system as a whole and, in particular, the landscape for those affected by those parts of the system which give rise to larger tax gaps.
Our membership is diverse and represents a broad range of taxpayers from Australia’s largest taxpayers to individuals. The proposed measures impact our members and their clients to varying degrees.
Consistent feedback from our members has indicated concerns that the proposed measures may have significant implications for the competitiveness of Australia as a destination for inbound investment and business viability, in comparison to our counterparts in the Asia Pacific region and globally. There are concerns that the proposed changes could be prohibitive for start-up businesses and disproportionately affect certain industries. We consider that it is imperative that the proposed measures give effect to the policy intent of closing loopholes for tax avoidance in a reasonable and proportionate way. This will ensure that our tax framework supports and encourage Australia’s attractiveness as a jurisdiction for inbound investment and domestic growth, without imposing unduly onerous compliance costs on taxpayers.