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Australia Targets Tax Crime Through Global Data-Sharing Initiative
Source: http://www.futuregov.asia
Source Date: Tuesday, October 22, 2013
Country: Australia
Created: Oct 29, 2013

The Australian government’s peak tax collection agency Australian Taxation Office has rolled out a global data-sharing initiative that enables participants to target, track and tackle off-shore tax dodges.

This initiative, supported by the Australian Treasurer Mr Joe Hockey, ramps up the monitoring of off-shore tax shelters. This programme features expanded data-exchange between participating countries, including the UK, US and regional counterparts.

This month, Mr Hockey initiated further discussions about off-shore tax havens at the G20 finance ministers meeting in Washington DC. The Australian government is expanding its scrutiny of multinational firms that shift profits to low-tax environments, while limiting their host-country tax obligations.

The next G20 global meeting is being held in Brisbane (Queensland) during 15-16 November 2014 under the auspices of the Australian government’s Department of Prime Minister & Cabinet.

Financial challenges

Current tax investigations and data-sharing is being canvassed as the “largest of its kind in history,” according to the ATO’s Deputy Commissioner of Serious Non-Compliance, Mr Greg Williams. This programme highlights advances in multilateral coordination, while making global tax evasion a key item on the international agenda.

The ATO is taking a “whole-of-government” approach to managing tax crime, according to a position paper, Targeting Tax Crime. During 2013-2014, the agency’s tax haven-related compliance activity will include 680 targeted reviews, 115 audits, and 50,000 letters.

This initiative is supported by data mining, data matching and risk-profiling techniques. Legislative reforms, court rulings and increased international cooperation are part of the arsenal to tackle tax evasion.

Regionally, the ATO is taking a “lead role,” while complementing strong international action, on various fronts. Initiatives include sharing data with over 15 jurisdictions in the Asia-Pacific region. In the New Year, details will be shared about specific tax haven-related compliance activities.

Data mining

Among its technology investments, the ATO uses data-mining tools to better understand relationships between individuals, trusts, partnerships and companies within a group. This information-mining capability enables staff to focus on targeted groups and key decision-makers. Tools are available to more readily detect income, assets and compliance irregularities.

Starting in June 2014, the ATO gains additional funding to expand and improve its ICT systems and capabilities. It will focus compliance activities on companies that use techniques to shift profits offshore, or avoid tax obligations. Better data-sharing enables revenue-collection agencies to build detailed profiles of individuals, groups and entities.

Profile matching

A recent Compliance in Focus 2013-2014 report foreshadows an expanded use of data and information-matching activities.

Presently, more than 1,300 large or multinational businesses operate in Australia. Each company has an estimated AU$ 250 million annual turnover or more. Most large and multinational businesses comply with tax laws, notes the ATO report.

But some actively source opportunities to exploit vulnerabilities in laws. Moreover, different countries have different tax systems. These create opportunities for multinationals to shift profits to jurisdictions, where they are taxed more lightly, as a result, eroding host-countries’ tax base.

In other news, Ms Frances Cawthra, the ATO’s Chief Financial Officer, shares compliance management insights at the 3rd Regional GovCFO Forum Australia being held Monday 2 December 2013 in Canberra.

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