Australia crackdown on Google taxes seen holding investment risks
By Victoria Thieberger
MELBOURNE (Reuters) - Australia faces an uphill battle to capture a greater share of tax revenue from multinationals such as Google and needs to work with its trading partners to avoid scaring away investors with an image as a high tax nation, tax lawyers and specialists say.
Australia has announced a crackdown on tax practices that big firms use, legally, to shift income to countries with low tax rates such as Ireland and the Netherlands.
Britain and Germany are also looking at ways to make sure multinational companies pay what they view as a fairer share of taxes and they are urging the G20 group of developed nations to work together to protect tax revenues.
Some tax specialists argue that Australia's proposed measures, which follow several major changes in Australian tax regulation over the past 18 months, may discourage foreign companies from investing in the country.
"What is starting to happen is that Australia is being increasingly seen as a high sovereign risk country on taxes," said Paul Stacey, tax counsel at the Institute of Chartered Accountants.
The government has drafted proposals that include rules to prevent profit shifting, as well as setting up a think-tank to review the strategies that multinationals use to reduce their tax bills.
"This review will only increase that perception," Stacey said.
Revisions of the proposals will go to parliament early next year after a consultation period. Continued...