SYDNEY: The ATO is keeping watch over a large number of companies with international restructures or ‘significant cross-border arrangements. Australian companies sent more than $100 billion to related parties in the low-tax nation of Singapore and another $15.6 billion to “hubs” in Switzerland, new figures from the Tax Office reveal.
The data, contained in the Australian Tax Office submission to the federal inquiry into corporate tax avoidance, gives a fresh insight into how commonly multinational groups shuffle money between countries.
The ATO is keeping watch over a large number of companies with international restructures or ‘significant cross-border arrangements’. The ATO is keeping watch over a large number of companies with international restructures or ‘significant cross-border arrangements’.
The Tax Office said it was keeping a watch over “a large number of companies that have undertaken international restructures or have significant cross-border arrangements”. Australia’s cross-border trade is $600 billion – and the Tax Office said that more than half of it was transactions between related entities – that is, companies in the same corporate group.
The submission refers to this shifting of money offshore between related entities as “international related-party dealings” and said in 2012-13 the value totalled $388.4 billion. It also said that the value of these related party dealings was “highly concentrated within the largest 30 corporate entities”, which account for about 50 per cent of the total.Singapore is the top country of choice for marketing and finance hubs.The figures shows that in 2012-13, more than $100.4 billion worth of related-party flows went to Singapore.
This is up from almost $40 billion just a year earlier.The next biggest country for related-party flows was the United States ($41.3 billion), Japan ($31.5 billion), Great Britain ($23.2 billion) and Switzerland ($15.6 billion). In all cases the amount of money going to hubs offshore has more than doubled from a year earlier.
Toll said in it its submission Singapore and Hong Kong were “regional hubs for doing business” and were not associated with tax secrecy.A number of companies are now trying to enter into deals with the Tax Office that virtually lock in the amount of tax they pay on future profits ahead of time. Known as Advance Pricing Agreements, the Tax Office said the use of these has increased by 12 per cent over the past three years. In addition, more companies are requesting private rulings on complex tax matters (up 30 per cent since 2011) and making voluntary disclosures (an increase from three in 2011 to 14 in 2014).