'Name and shame MNC tax cheats'

Aussie inquiry wants officials to work with foreign counterparts to boost transparency

An Australian parliamentary inquiry into tax avoidance by multinationals has proposed a "name and shame" register of the worst offenders and wants officials to work more closely with foreign counterparts to improve transparency.

The inquiry's report, tabled yesterday, follows growing concerns in Australia about the low rates of tax being paid by multinationals. 

Executives from companies such as Google, Microsoft, Apple, BHP and Rio Tinto have been called to appear before the Senate's economics committee inquiry. 

In its interim report, the committee recommended that the Australian Tax Office (ATO) reveal details of companies that make large tax avoidance settlements with the government. It said all big companies operating in Australia - even if they are subsidiaries of multinationals - should be required to release details about their finances, including annual reports detailing the amount of tax they paid, their Australian revenues and deductions.

Earlier this year, the ATO said that Australian companies sent about A$388 billion (S$403 billion) in 2013 to related offshore companies, with those in Singapore being the biggest recipient of such funds, followed by the US and Japan.

"Increasingly, Australian operations of multinational companies are becoming agents, shifting revenue offshore specifically to minimise Australian profits," it said.

The report will add to growing pressure on the government to force big companies to pay tax. Australia's corporate tax rate is 30 per cent, but about a third of the country's biggest companies pay just 10 per cent. 

Government data released under freedom of information laws earlier this year shows firms have been channelling revenues offshore to operations in places such as Singapore, Hong Kong and Ireland, which have lower tax rates. The committee recommended that Canberra "work with governments of countries with significant marketing hub activity to improve the transparency of information regarding taxation, monetary flows and inter-related party dealings".

Committee chairman Sam Dastyari said the inquiry had not heard evidence that companies were acting illegally, but added: "People are asking... 'How is this type of behaviour legal?' "

A Singapore Ministry of Finance spokesman told The Straits Times it was a responsible jurisdiction and did not condone illicit activities.

"We adopt internationally accepted arm's length principles for taxation," the spokesman said. "We also have various channels of cooperation with foreign jurisdictions which are guided by international standards and norms. Our appeal to businesses is based on a variety of factors such as our strategic location in Asia, extensive connectivity, strong legal and regulatory framework, and highly skilled workforce.  Therefore, many companies have chosen to locate key global and regional functions in Singapore."  

Earlier this year, the ATO said that Australian companies sent about A$388 billion (S$403 billion) in 2013 to related offshore companies, with those in Singapore being the biggest recipient of such funds, followed by the US and Japan.

The committee said it wanted to inquire further into the "legitimacy" of transfers of revenue earned in Australia to other jurisdictions: "While many foreign-based multinational corporates, such as Google and Apple, have chosen to use Singapore as a regional base for operations in the Asia-Pacific, some large Australian mining multinationals, such as BHP Billiton and Rio Tinto, have strategically established operations in Singapore to act as a base for marketing their products."

Despite the concerns about the flow of funds to Singapore, Australian officials have frequently credited the Singapore authorities with assisting efforts to target tax avoidance. 

Treasurer Joe Hockey has said he will order a crackdown on 30 offshore companies but the government opposes a name and shame list.

A version of this article appeared in the print edition of The Straits Times on August 19, 2015, with the headline ''Name and shame MNC tax cheats''. Print Edition | Subscribe