Australia’s Biggest Companies Skipping Out on Taxes
April 20, 2016 Taxation in Australia
CANBERRA – Researchers in Australia have claimed that most of Australia’s biggest companies are paying tax at a rate lower than the headline income tax rate, and in two years alone they have skipped out on AUD 5.6 billion in taxes.
In new report released on April 20th researchers from the University of Technology Sydney claimed that more than three quarters of the 100 biggest multinational businesses in Australia are paying an effective rate of tax far below the standard 30 percent tax rate of corporate profits.
The exact rate of tax paid varied between each business, but on average energy companies paid a rate of approximately 20 percent, while hi-tech firms and pharmaceuticals paid rates of 7.5 percent and 5.7 percent respectively.
In total the tax minimization techniques employed by the large multinational cost the government an estimated AUD 5.4 billion in lost tax revenues over the course of 2013 and 2014.
It was also found that energy companies employed minimized their taxes by taking on high-interest debts from subsidiaries in order to reduce shift profits to low-tax jurisdictions, while pharmaceuticals and high-tech firms opted to shift profits offshore through licensing fees and intellectual property fees.
The authors of the report called on the government to use the upcoming budget plan to announce a new tax on diverted profits and to eliminate deductions for interest and other financial payments to subsidiaries.
Photo By: Martin Howard