Sweetheart tax deals scaled back

THE Australian Taxation Office has dramatically scaled back the number of one-onone tax deals it has with multinationals amid a crackdown on corporate tax dodging.

New figures from the tax office reveal the number of Advance Pricing Arrangements in operation has fallen by a third in the past three years.

APAs are confidential pacts struck between multinationals and the ATO that lock in the amount of tax a company has to pay ahead of time. The deals, which are offered by numerous governments around the world, have been criticised for being secretive and allowing companies to dodge paying their fair share of tax.

Data provided to Business Daily shows the tax office had 114 active APAs in operation at the end of last month, down from 175 at June 2014.

The drop has happened as new tax avoidance laws have come into effect in Australia. It also comes as the tax office takes a harder line against aggressive corporate structures that either lower the amount companies must pay or shift profits to overseas tax havens.

The ATO is chasing an extra $3 billion in tax from seven major companies including Apple, Google, Microsoft, BHP Billiton and Rio Tinto.

Last week, it secured a farreaching Federal Court victory against oil and gas major Chevron, which had inflated the interest rate paid on internal lending, lowering its local tax bill in the process.

The ATO moved to beef up the APA program in late 2014.

“Since 2015, there has been an increase in the number of taxpayers that have either not been accepted into the APA program or have withdrawn at the early engagement stage of the process,” it told Business Daily in a statement.

“Reasons include taxpayers unwilling to provide information, uncertainty as to the taxpayer’s future structure, taxpayers deciding that an APA is no longer cost effective and inappropriate APA requests from taxpayers.”

The tax office is also taking longer to process any agreement, with the number of applications rising from 58 in June 2014 to 108 at the end of March.

Clayton Utz partner Niv Tadmore said the ATO was being more selective in the agreements it signed and seeking more information from companies.