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Wednesday, 16 October 1985
Page: 1315


Senator MASON —Is the Minister representing the Treasurer aware of a story in the current National Times entitled `An Australian success story (they pay no tax)' which states that the Swiss-based aluminium company, Aluswisse, has paid no tax at all on its alumina exports from Gove in the Northern Territory even though exports reached $US100m a year as early as 1976; the Australian Taxation Office estimates that between that year and 1979 the company's income was understated by $100m; the Department of Trade estimates that Aluswisse's 1984 exports differed from the lowest range of `fair and reasonable' export contracts by a least $34m, and overall it has been estimated that as much as $US550m may have been shaved from export values between 1972 and 1984 by the company through the use of transfer pricing? Is the Government optimistic that it will be able to recover the taxes already owed to the Australian people by this company and others which may be using similar methods? Most importantly, will the Government consider introducing a provisional taxation system for this type of mineral exporter so that considerable funds would be held by the Government while any taxation appeals took place? Will the Government also consider machinery--


The PRESIDENT —Order! The honourable senator's question is getting a bit long. I ask him to bring it to a conclusion.


Senator MASON —I am dealing with the two points on which I want information from the Minister.


The PRESIDENT —Order! I suggest that the honourable senator's question is getting a bit on the long side.


Senator MASON —Mr President, I have four or five lines to go.

Honourable senators-Oh!


Senator MASON —I take it that the Minister has got my first question. If I can only give the Minister my second question without interruption, with all respect to you, Mr President--


The PRESIDENT —Order! If the honourable senator does not ask his question, I will ask him to resume his seat. Will the honourable senator ask his question?


Senator MASON —Certainly, Mr President. The second part of the question is: Will the Government consider machinery by which guidelines for realistic export prices could be set in order to prevent the use of transfer pricing to avoid minimised tax?


Senator WALSH —The Minister responsible for the administration of export controls is the Minister for Trade. His Department monitors prices, including transfer prices of multinational companies, in regard to exports of some resources, including alumina. Insofar as the question concerns the taxation laws, the secrecy provisions of the Income Tax Assessment Act, of course, prevent the Commissioner from commenting on the affairs of individual companies, including that mentioned in the National Times. However, the Commissioner has advised that within the Taxation Office there are specialist units which monitor international transactions by multinational companies or enterprises to detect profit shifting activities through what is commonly known as transfer pricing. For that purpose, information is obtained from a wide range of sources.

Section 136 of the Income Tax Assessment Act and new provisions of that Act, introduced in 1982 and effective from May 1981, and provisions to the same effect in Australia's double taxation agreements, empower the Commissioner to deal effectively with arrangements involving the shifting of profits out of Australia through transfer pricing and other means. The operation of those provisions is being closely monitored by the Commissioner.

In respect of Senator Mason's suggestion-and I do not want to sound pedantic about this-that a provisional tax be levied on these companies, I expect that under the tax reform package they will be subject to provisional tax, but I do not see how provisional tax per se will overcome the problem. If Senator Mason means a withholding tax, which I suppose could be regarded as a form of provisional tax, then that may be another matter. I shall refer that to the Treasurer for his comments.