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Monday, 3 June 2013
Page: 4962


Ms ROWLAND (Greenway) (17:12): I want to ask the Assistant Treasurer about something that has been the subject of a bit of commentary lately in technology sector. That is, namely, the expectation almost of some people that multinational corporations with deep pockets can and do minimise their tax liability—but at what cost to domestic taxpayers? I mention two companies, Apple and Google, simply because they are two of the largest technology names around that have been discussed, but it is not exclusively about them. I note there is an issues paper, for which submissions just recently closed, called Implications of the modern global economy for the taxation of multinational enterprises. I will just go to a few things in that paper before I go to my questions. It says:

International tax reform is increasingly on the agenda of G20 Finance Ministers and Leaders.

I note that Australia will be chairing the G20 next year, so it is probably an item that Australia will be taking an interest in on that basis. It also says that there are a 'range of possible policy approaches' in response to the issue—in particular, and I have been seeing this figure a fair bit, the 'double Irish-Dutch sandwich' as one of the mechanisms for minimising tax. The question put in the paper—

Ms O'Dwyer: What's your question?

Ms ROWLAND: We'll get to it. You are looking silly. Shush. One of the questions in the issues paper is:

Should Australia care if tax is avoided in another country?

And there is quite an interesting discussion there about the double Irish-Dutch sandwich. It says:

… where a tax treaty partner is not exercising its right to tax this is conceptually equivalent to having a tax treaty with a tax haven.

That is a pretty serious thing. The consultation question for this part of the paper is:

Views are sought on the extent to which another country not exercising its right to tax should be a matter of concern to Australia.

There are a number of other items addressed here, but I think we can all agree on a couple of general principles in our corporate tax system—that we want it to be fair, competitive and sustainable.

I know that there are a number of mechanisms that were looked at by previous governments, in closing these sorts of tax loopholes. I know that the Commissioner of Taxation has identified a number of aggressive tax-minimisation flaws, where they are exploited to take advantage of our system, and some of them are addressed in the paper I just referred to. I do believe, and I think the public share this concern, that profit shifting by MNCs is a problem that affects the tax system of all countries. It is not exclusive to Australia, but people are rightly concerned about these multibillion- even trillion-dollar entities that are avoiding—perhaps legitimately, if they are using effective tax loopholes that are already there—or minimising their tax liability.

My question is: what is the government doing to protect Australia's corporate tax base from erosion and profit shifting, in light of not only multinational corporations but also ones that have been in the media and are of particular concern when we talk about some of the largest companies in the world? What are we doing and what are our options? I know that the submissions only recently closed on this discussion paper but it is proposed to have responses detailed very soon, so I would be interested in that aspect.