Treasurer Joe Hockey in a Sept. 4 release said that he has asked the Commissioner of Taxation to examine whether location specific profits are being generated in Australia on account of the high prices multinationals charge to consumers and, if so, whether multinationals are appropriately allocating these profits to Australian operations under the transfer pricing rules.
“Australian consumers often pay much higher prices compared to United States consumers for identical IT hardware, software, music, games, sporting equipment and fashion, to mention a few, [while] some companies selling these products pay little tax in Australia,” Hockey said.
More stringent audits of multinationals will be undertaken to determine if these higher prices create location specific profits generated in Australia which are then shifted out of the country through inappropriate transfer pricing, he said.
Hockey highlighted government efforts to ensure that multinational corporations pay their fair share of tax, including legislation advanced to prevent the use of hybrid financial arrangements and to tighten the thin capitalization rules. He also noted the government’s participation in the OECD/G-20 base erosion profit shifting initiative as well as its work in support of a common reporting standard for automatic exchange of information. Release
