Originally published in the Australian Financial Review, January 2015


N
o quick fix for global tax

There is an implication in your story about Apple Australia’s tax bill (“Apple Revenue drops during ATO talks”, AFR, January 28) that if we hit up multinationals like Apple for more tax we’ll have gone some way to addressing our structural deficit issues, somehow lessening the need for tax reform.  Such thinking would be a trap: a preference for a quick fix over the hard work of far-sighted and sustainable reforms.  

The reality is that in the global economy, competitiveness - including tax competitiveness - is the name of the game which many jurisdictions are playing.  If we want to have multinational companies operate here then we too need to compete globally and ensure that we have attributes that attract, rather than dissuade, investment.

Yes, there’s a level of frustration about the tax planning techniques used by certain multinational enterprises to divert profits. It’s why the G20 and the OECD are working on a universal solution to base erosion and profit shifting (BEPS).  It’s also why Britain is introducing a Diverted Profits Tax and why our Treasurer, Joe Hockey, has said he’s “not going to cop this minimisation.” 

Common sense says that as countries abandon the global process to go it alone we’ll end up with a patchwork of global tax rules which encourage multinationals to shop around.  There could also be unintended consequences for Australian firms with global aspirations.

We must maintain a rational conversation about the best overall tax mix.  We also need to remember that we will have to live with the consequences of these decisions for years, if not generations to come.

Alex Malley is the chief executive of CPA Australia

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