Multinationals trading in Australia funnelled more than AU$30 billion to Singapore in one year to avoid tax, an investigator says.
Jason Ward, who was part of a coalition that sought Freedom of Information documents over corporate Australia's tax avoidance, said the documents revealed AU$31 billion made in Australia in one year was shuffled through Singapore by 10 major companies. The documents protected the names of the companies involved.
"Any information which could identify individual companies has been blocked out," Ward told the Seven Network's Sunday Night program. "There has to be consequences for these companies, for what they're doing. It's not illegal but it's completely immoral."
Ward said that one company was responsible for an AU$11 billion transfer from Australia to Singapore in one year.
Originally announced last October, a Senate inquiry into tax avoidance is expected to table its first report in the parliament on Monday. It is understood the report will make more than a dozen recommendations, including that the Australian Tax Office (ATO) be forced to disclose all avoidance settlements above a certain level, and that a name-and-shame register should be created.
Chairman of the inquiry, Labor Senator Sam Dastyari, said the system was "completely broken" and privacy provisions were allowing Australia's worst offenders to hide. He said corporates were essentially selling products to themselves, through companies set up in Singapore, to keep their profits down.
"When you have a handful of multinational companies able to take Australian taxpayers for a ride, the system has to change," Dastyari said.
On ABC radio, Treasurer Joe Hockey -- who previously likened tax-evading companies to thieves -- said the government will go after 30 primarily offshore-based companies that are not paying their fair share of tax, promising to put legislation to parliament next month.
The treasurer also said Dastyari had questions to answer about the release of recommendations to media outlets before the report had been signed off by other senators.
"It's extraordinary. This is a very serious issue that goes to the heart of the integrity of the entire Senate," Hockey said.
Hockey accused the senator of trivialising the issue by playing political games.
Senator Dastyari denied speaking specifically about the unreleased report's recommendations, insisting what he said were his personal views.
He argued there was a thirst for information within the community about what companies were up to.
"These companies do care about their reputations and they do care about their market share," Dastyari told ABC TV. "Exposing some of the worst practices, I believe, puts a lot more community pressure on these companies."
Independent Senator Nick Xenophon, who is also on the inquiry committee, said transparency was key.
"Whatever the government comes up with, the Senate will be in a much better position to consider that legislation given the forensic look we've had at this whole issue," he told ABC radio.
Companies that minimise the tax they pay in Australia are unlikely to find themselves named and shamed, with Assistant Treasurer Josh Frydenberg telling Sky News the government will not be doing that because it has got the resources to go after companies in other ways.
"It might suit [Dastyari's] political purposes to go and scream the names of these particular companies that he's after but it actually doesn't suit Australia's purposes," Frydenberg said on Monday.
"The ATO is going after these companies."
Previously, a report by multi-industry union United Voice and the Tax Justice Network Australia, found that at least one of Australia's largest telecommunications companies is likely to be scrutinised by the inquiry. The Who Pays for Our Common Wealth? report said 29 percent of Australia's top 200 companies are paying an effective corporate tax rate of 10 percent or less, while more than 14 percent have an effective tax rate of 0 percent, with Optus' parent company SingTel named as one of the country's top tax avoiders.
The report estimated Singapore-based SingTel had an average annual foregone tax figure in Australia of AU$713 million, alleging the telco averaged a tax paid amount of AU$284 million, off the back of the AU$3.3 billion average pre-tax profit. The resulting effective tax rate of 9 percent is well below Australia's 30 percent corporate tax rate.
In April, executives from Apple, Google, and Microsoft confirmed they were being investigated by the ATO as part of the Senate's tax avoidance inquiry.
Google Australia managing director Maile Carnegie said the company made AU$58 million in revenue in 2013, and profits of just more than AU$46 million, but paid AU$7.1 million in tax. She said the majority of Google's taxes were paid in the US as that is where the global headquarters is based, where the company generates the most investment in research and development, and where it undertakes the most risk.
Much of Google's Australian revenue from advertising is actually taxed in Singapore, where the tax rate is much lower -- a practice also employed by Microsoft.
Meanwhile, Apple's Australian managing director Tony King said that Apple Australia is entirely owned by Apple Ireland, but insisted that the company does pay tax in Australia.
He claimed to not know of the so-called "double Irish Dutch sandwich" process of shifting profits to low-tax countries -- a practice in which Apple has previously been accused of engaging.
Earlier this year, Apple reported that it paid more than double in tax payments for the 2014 financial year. During 2013, Apple had only paid AU$36.4 million compared to 2014, when it paid AU$80.3 million in tax.
This was an improvement from Apple's tax contribution in 2012, when it decreased to AU$40 million from AU$94.7 million in 2011.
In May, the Australian government announced plans to introduce the so-called Netflix Tax, which would mandate that foreign companies selling digital TV shows, music, books, films, and subscription services to Australian customers pay the country's 10 percent GST.
According to the treasurer, this measure would raise AU$350 million over four years.
"Both [Hockey] and I have been quite consistent in our call in providing a level playing field for the provider of key services in Australia, whether they come from overseas or whether they're provided domestically, and this is an area that we've been working with international partners on, trying to get a good understanding of where Australia's tax system should be for the future, because we have a growing digital and e-commerce world, and the tax system needs to stay up with that game," Frydenberg said at the time.
The emergence of new ways of transacting, such as the cryptocurrency bitcoin, has also proven to be problematic for Australia's tax system, according to a discussion paper released by the government earlier this year.
The paper, Re:think. Better tax, better Australia highlighted new technology, as well as the digitisation and globalisation of the economy, as being among the prime suspects behind the trend for multinational companies to engage in tax avoidance practices.