March 30, 2015 / 5:44 AM / in 2 years

Australia looks at GST, company tax in planned tax overhaul

Australia's Treasurer Joe Hockey arrives for a meeting of G-20 finance ministers and central bank governors during the IMF-World Bank annual meetings in Washington October 10, 2014. REUTERS/Joshua Roberts

SYDNEY (Reuters) - Australian Treasurer Joe Hockey hinted on Monday at changes that could force digital companies like Apple Inc, Google Inc, Alibaba Group Holding and Uber to pay more tax on transactions that take place in Australia.

“I want to find a way for them to pay the GST,” Hockey told reporters, referring to the goods and sales tax, after releasing a discussion paper on the country’s “unsustainable” tax system.

“We’re not collecting the revenue that we should be collecting and that we want to collect, that is fair,” Hockey said.

The long-awaited 200-page “Re:Think” report does not outline any definitive changes but political and market analysts believe its focus on a few key areas heralds forthcoming changes.

Up for discussion are a cut to Australia’s corporate tax rate, a broadening of the goods and services that are included in the GST and a new levy on bank deposits.

“New technology, changing consumer behavior and increasing global trade are threatening the medium and long-term viability of our taxation system,” Hockey told reporters in Canberra. “For too long, our taxation system has been reactive not proactive.”

Australia led a push by the Group of 20 as its chair last year to develop stricter rules on cross border taxation to close loopholes that have allowed companies like Google, Amazon.com Inc and Starbucks Corp to avoid paying taxes.

The Australian government collects up to 70 percent of its revenue from company tax and personal income tax, a level that Hockey said is unsustainable.

It needs the support of the state governments to make any changes to the GST, which at 10 percent is one of the lowest in the developed world.

At the other end of the spectrum, Hockey suggested that Australia’s company tax was too high and is being eroded by online-based companies.

Australia’s 30 percent company tax rate is higher than many of its competitors’ and a third of all company tax is paid by just 12 companies.

Hockey stressed that the existing bank deposit levy of 0.5 percent on deposits up to A$250,000 was introduced by the previous labour government and suggested it was not enough.

“There’s many things I don’t like that I have to implement at the moment, that have been a legacy from six years of bad Labor government,” Hockey said.

Submissions and suggestions on the paper are due by Jan. 1.

Reporting By Jane Wardell; Editing by Simon Cameron-Moore

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