Joe Hockey (North Sydney, Liberal Party, Treasurer) Share this | Hansard source

The answer to the honourable member's question is as follows:

(1) and (2) Chevron case.

The Treasury will continue to monitor the progress of the Chevron case.

(3) and (4) Tax Justice Network report.

The Tax Justice Network's estimate of the revenue lost to tax avoidance by the ASX 200 companies is flawed. The report uses the amount of company tax paid as a percentage of accounting profit to calculate the effective tax rate and compares it to the statutory corporate tax rate of 30 per cent.

Taxes are not applied to accounting profit but to taxable income. There are significant and intended differences between accounting profit and taxable income, such as the treatment of capital gains and losses, recognition of foreign income, and treatment of franking credits. These differences mean that an analysis of the effective tax rate using accounting profits is misleading.

(5) Australian Government action to address tax avoidance through the use of artificial debt loading.

Australia has a robust set of domestic laws in place to deal with tax avoidance by multinational companies, including comprehensive controlled foreign company and thin capitalisation regimes, tough transfer pricing rules and a general anti-avoidance rule.

The Parliament recently passed two laws to further respond to integrity issues in the corporate tax system which address profit shifting through the use of debt in Australia. These changes involve:

Governments around the world are co-ordinating their efforts to address tax avoidance in the form of tax base erosion and profit shifting (BEPS) by multinationals. Australia is a member of the OECD and the G20, which are working together on strategies to address tax avoidance and evasion.

As G20 President in 2014, Australia played a leading role in international discussions regarding BEPS. At the recent meeting of G20 Leaders in Brisbane, the G20 Leaders welcomed the significant progress achieved to date on an Action Plan to address BEPS. The Action Plan will be finalised by December 2015.

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