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Opinion piece: Who is really to blame for base erosion?


Recently, we have seen comments from government and other sources about multinationals who are said to “shirk” the obligation to pay their “fair share of tax” in the context of press reports about multinational IT companies and how little Australian tax they pay on profits from sales to Australians. The underlying problem is base erosion, that is, reduction of Australia’s tax base by citizens dealing directly with overseas suppliers, who do not pay Australian tax the way their domestic competitors do.

This is not new; legislators and administrators have known of the problem, and possible solutions, for a long time. However, we seem to be witnessing a pattern of careful demonisation of taxpayers, whereas the real problem, in the author’s opinion, is lack of results from those responsible, including ministers from both sides of politics, for administration of the tax system over the last 15 years.

Author profile:

Author Photo - Paul McNab CTA
Paul McNab CTA
Paul is a Partner and solicitor in the Tax Controversy practice in PwC Sydney. Paul has more than thirty years of taxation experience and has published and spoken on a wide range of taxation issues throughout that period. Over the last 20 years he has had extensive experience in assisting clients understand the tax risks they face and manage their interactions with the ATO. His client base includes some of Australia and the world's largest multinationals and the information technology and telecommunications sectors are particularly heavily represented. His work has included planning for and review of significant transactions (including business value chain transformations), assistance with the assessment and disclosure of tax risk to statutory auditors, management of audits by the ATO and negotiation of settlements and the preparation and conduct of litigation. Current at 01 April 2015 Click here to expand/collapse more articles by Paul MCNAB.
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