Back in July, ABC’s The Business and Michael West featured an extraordinary raft of allegations from a 32-year veteran industry insider turned whistleblower, George Rozvany, who claimed that multinational tax avoidance was “out of control” and cost the Budget up to $50 billion dollars a year in lost revenue.
Rozvany claimed the Big Four accounting firms – PwC, Deloitte, KPMG and Ernst & Young – were the key masterminds behind the tax dodging. He also cited sham transfer pricing arrangements as a key avenue by which multinational tax avoidance takes place:
“Transfer pricing behaviour clearly is the greatest concern because it’s very easy for a transfer pricing expert to dress up a sham transaction as a real commercial transaction”…
“I’m talking about service arrangements, intellectual property transfers, such as patents or use of patents, and perceived transfer of goods, sham loans between related parties, but in reality it’s all about providing services at too high a price which then shifts [income] to a lower tax jurisdiction.”
Then in September, Michael West released another alarming report about multinational tax avoidance featuring Michael Hibbins – a former executive of a global oil major operating in Australia – who claims that tax avoidance is “rife”, with tax avoidance taking place mostly via transfering profits offshore while accepting the transfer of group costs into Australia.
Now, an Auditor-General’s investigation has found that fossil fuel giants are using questionable deductions to reduce their tax bills by billions of dollars. From The Age:
Underlining rising concerns over whether the $200 billion liquefied natural gas industry is paying its fair share of tax, Mr Hehir’s report discovered a $5 billion bonanza of deductions claimed by the project in just one 18-month period.
Some of the Auditor-General’s most damning criticism was reserved for a single $705 million cost deduction that helped reduce royalties owed to the taxpayer by $88 million. Mr Hehir argued the $705 million deduction may not have been technically valid.
The multibillion-dollar deductions – which are still being taken despite the [North West Shelf] project being fully mature after 25 years in operation – dwarf the $1.9 billion in royalties it paid in the same 18-month period.
Mr Hehir warned his review may only scratch the surface…
The industry has built up a mountainous $187 billion in exploration and development tax credits, which continue to rise sharply and will be used to insulate companies from paying PRRT for years to come.
Last week, Craig Emerson, one of the architects of the PRRT in the Hawke government backed calls for a parliamentary inquiry into why the boom in LNG exports shows no sign of delivering any meaningful contribution to the wealth of Australia.
Just another day in the life of Banana Republic Australia!
