Multinational companies who seek to minimise tax or move profits offshore are now firmly in the sights of the Federal Government.
The Australian Tax Office is embedding a team of around 50 auditors in 10 multinational companies which operate in Australia.
It is believed that several IT giants, such as Google, are being targeted in an effort to close loopholes which have seen corporations who operate in several countries pay very little tax in Australia.
“We are going to work as hard as we can to make sure that companies that earn profits in Australia pay tax in Australia, but it needs to be a coordinated global effort and that is certainly what we are undertaking at the moment,” Mr Hockey told journalists at a press conference this morning.
While not naming any companies, Mr Hockey confirmed extra resources had been given to the ATO in a bid to extract more tax from multinationals.
He said the Government estimated that Australia was missing out on between $1 billion and $3 billion a year in revenue.
However, the Federal Government also announced the shedding of 3000 jobs in the tax office as part of its budget cuts, reducing the ATO’s anti-avoidance firepower.
The union representing Commonwealth public service staff, the CPSU, told the ABC that all those cuts were implemented by October 31.
The CPSU said a further 1,700 jobs are due to go from the ATO by the end of the 2016-17 financial year.
The Federal Government has also been working with other countries, particularly through the G20, to close the loopholes in tax rules that allow much of the minimisation behaviour to occur legally.
“Multinationals will no longer have the option of trying to use clever accounting to reduce their tax liabilities in Australia. Those days are coming to an end,” Mr Hockey told Marius Benson on ABC NewsRadio.
“Australia has led the charge in that regard in the G20 and through the OECD, but we’re also going to take very strong action domestically here in Australia.”
Mr Hockey acknowledged that such a process may not be a one-way street, with some Australian multinationals also exploiting tax loopholes in other countries.
“If Australian companies are not paying their fair share of tax overseas it is equally unfair for those jurisdictions,” he said at the press conference.
“We are trying to have a fair global taxation system.”