The tax office will likely up its surveillance and scrutiny of Australian firms around the impending base erosion and profit shifting (BEPS) reporting deadline, and is expected to be allowed increased access to relevant data in light of the Paradise Papers.
The fallout of the Paradise Papers revelations, which explores 13.4 million documents around the workings of investors utilising international tax havens, will see the ATO ramping up its level of scrutiny on the tax positions of corporations, says Thomson Reuters managing director for Australia and New Zealand, Ben Scull.
Mr Scull believes the regulator will be afforded increased visibility in tracking down non-compliance once the 31 December 2017 BEPS Action 13 deadline kicks in.
“I think the ATO does have the availability to ensure and mandate compliance from these multinationals,” Mr Scull told Accountants Daily.
“With the 31 December BEPs Action 13 deadline looming for country-by-country reporting and the ATO’s Streamlined Assurance Review programme, combined with public demand to reveal tax status via the Transparency Code – multinationals are now under unprecedented pressure to be compliant.
“The most important issue coming out is that companies will need to be very prepared for what's going to come and the December lodgement time frame where the tax office is going to have a lot more information readily available.”
Mr Scull also believes the tax office’s ability to uncover secretive activities and arrangements through the sharing of information from global counterparts should not be questioned.
“The amount of data, accuracy of detail and strictness of reporting deadlines has never been required to this level before and it is critical for companies to deliver in order to avoid harsh penalties and fallout from shareholders and the community in Australia,” said Mr Scull.
“The key position of the ATO is that they are asking companies to put in place the right level of technology, and processes and risk framework to provide them the data they need so I think the onus is definitely still on the position of the corporates.”
Likewise, BDO tax partner Carlo Moretti says the net is expanding for individuals who are avoiding their tax obligations.
“[The] Paradise Papers scandal proves that it's not just regulatory bodies that people have to worry about when avoiding their tax obligations. It’s essential for taxpayers to review the legality of any offshore transactions,” Mr Moretti said.
“The net continues to close and the more people continue to avoid paying tax, the more likely they will be identified and investigated by the authorities — and not just the tax office but the Australian Federal Police.”
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