南京夜网,南京桑拿网,南京桑拿论坛

Powered by Shoes28!

31 January
Comments Off on Multinationals and banks targeted

Multinationals and banks targeted

Multinational businesses are the prime targets of a sweeping plan to close down corporate tax loopholes, in a move expected to raise an extra $4.2 billion over the next four years.
Nanjing Night Net

With big downgrades in company tax punching a hole in the government’s revenue forecasts, Labor has tightened rules it says are being exploited by corporate giants.

The group of measures is the second biggest source of savings in the budget, behind the $11.5 billion raised by increasing the Medicare levy, and threatens to further damage Labor’s frosty relations with the big end of town.

The key targets of the crackdown are complex practices that allow big foreign businesses to shift profits into countries where they pay less tax, minimising their Australian liability.

But the local banks are also in the government’s sights, with tougher rules flagged for locally-based, low-taxed banking units that sell their services to overseas customers.

Treasurer Wayne Swan said the move to close the range of ‘‘unfair’’ loopholes in the corporate tax system was needed to make sure other taxpayers did not carry an unfair burden.

‘‘Businesses that aggressively exploit tax loopholes gain an unfair advantage over their competitors,’’ Mr Swan said.

‘‘If a few large companies use loopholes to avoid paying their fair share of tax, an greater taxation burden is placed on other taxpayers, like small and medium businesses and individual taxpayers.’’

A key plank of the changes relates to tax breaks that foreign subsidiaries receive on money they have borrowed – often from another arm of the same company.

Until now, foreign subsidiaries have been able to finance up to 75 per cent of their operations with debt, which allows them to make hefty tax deductions.

But the government will raise an extra $1.4 billion by lowering this limit to 60 per cent, following similar moves from cash-strapped governments overseas.

The taxman is also expected to raise an extra $406 million over four years through increased scrutiny of offshore restructuring activity that ‘‘facilitates profit shifting.’’

Big local banks including Macquarie Group are also likely to be affected by tougher rules for domestic units set up by the banks that pay only 10 per cent tax rates rather than 30 per cent.

The government believes the lenders are directing domestic activity into these areas and dodging tax in doing so. It estimates it can raise an extra $320 million over four years by tightening up on the rules, including a ban on different parts of the same bank trading with each other so that they get the tax break.

Mining companies also face changes that will net more for the taxman.

The budget contained measures to tighten the rules on exploration deductions for miners, in a move that is likely to prompt anger among the industry.

The changes are worth $1.1 billion to the government over four years, and are designed to avoid penalising junior miners conducting greenfields exploration.

The changes will have the most impact on companies that purchase a tenement that has previously been explored, by excluding the purchase price of the mining right and certain intangible elements like knowledge from being claimed.

The Government appears to be well aware the change could spark another stoush with the resources industry, and stressed in the budget papers that the government would ‘‘consult closely with industry on the design and implementation of the measure’’.

‘‘This measure will improve the sustainability of this important concession, which recognises that resources exploration is a vital and economically risky activity that has spillover benefits to the economy,’’ the budget papers said.

The government also expects to claw back an extra $60 million through a ban on a strategy known as ‘‘dividend washing’.’ The strategy, used by big domestic investors, allows them to effectively double the tax break they receive from franking credits.

The move to target big business for more tax revenue came as it was revealed that falling company tax receipts were the main reason for the sharp deterioration in the budget’s bottom line.

Forecasts of corporate tax receipts were written down by $24.3 billion over the four years to 2015-16. The big downgrades in company tax have been blamed on falling commodity prices, a stubbornly high dollar that is squeezing many firms, and weak consumer spending.

This story Administrator ready to work first appeared on Nanjing Night Net.

 
Comments are closed.