Is corporate rescue a realistic ideal? Business as usual in Australia and the United Kingdom

This paper seeks to review the operation of Australian corporate law rescue regimes in the context of those originally contemplated by Sir Kenneth Cork and more latterly in Australia, primarily in the hands of Ron Harmer. In doing so, it draws upon some of the observations made by Professor Fletcher in the second wave of 20th century corporate rescue reform in the United Kingdom.

Developing nations need more than words from G20 tax reform

Tax reform is squarely on the agenda for the G20 Brisbane summit in November. The current international tax regime is broken and it’s going to take significant effort on a global scale to fix it. In a recently released CEDA Report on securing the G20’s future, I recommended the role Australia could play in ensuring real and substantive progress is made in international tax reform. There’s a very real need to ensure the Brisbane summit is not just a “talkfest”. One group that stands to significantly win or lose from reform, or lack of it, is developing nations.

G20 host Australia faces hard truths of multinational profit shifting

The G20 Finance Ministers have the opportunity this weekend to endorse the initial recommendations of the OECD on how to address the global problem of multinational tax avoidance. The work of the OECD on the issue to date is substantial. Most notable is the adoption by many nations, including Australia, of the Common Reporting Standard for the automatic exchange of tax information. This standard will allow significant inroads to be made into tax avoidance, particularly by individuals sheltering money offshore. This is the first step in an ambitious tax reform program. There is a long way to go if we are to end the issue now known as Base Erosion and Profit Shifting (BEPS). This week’s release of the first of the OECD recommendations contains some positive signs that further advances will be made. It also recognises some hard truths.

G20 tax reform plan should prevent another Lux leaks

The G20 Communique is good news on the international tax reform front. As part of the G20 commitment to boost economic resilience the Communique commits G20 nations to taking action to ensure fairness in the international tax system. This means they are looking at ways to ensure profits are taxed where economic activities deriving the profits are performed and where value is created.

Tax transparency can work for companies if they do it right

The Tax Transparency Package released by the European Commission last week comes amid global moves by the G20 and others to make it more difficult for companies to avoid paying their fair share of tax. But as serious information sharing plans are hammered out between nations around the world, the Australian government is considering protecting the privacy of some of Australia’s richest people, diluting transparency measures aimed at private companies.

Not all corporate tax avoiders will be snared by new rules

Hockey’s budget announcement of two major tax integrity measures was flagged before the budget was handed down, but even that came as no surprise. Integrity, or lack thereof, in our tax system is a hot topic and an easy target for a Treasurer looking to sell a federal budget. The first of the proposed changes is to our GST regime. No-one likes hearing that they will be paying more tax. But, the charging of GST on supplies of digital products and services in Australia by an off-shore supplier will at least make sense to the general public. With the inherent unfairness in the current system and a revenue raising prediction of A$350 million over the next four years, most are likely to accept the logic of such a measure. The second of the proposed changes are new laws to be included in Australia’s general anti-avoidance provision. New laws, which will apply from 1 January 2016, are aimed at multinational companies engaged in aggressive tax practices. The proposed anti-avoidance law is designed to stop multinationals that artificially avoid a taxable presence in Australia. It is difficult to see how this strategy of addressing specific behaviour through what is considered a general provision will work. And, it is these changes that are already causing confusion.

More than naming and shaming needed to stop corporate tax avoidance

The report of the Senate Economics References Committee inquiry into corporate tax avoidance comes with the subtitle – “You cannot tax what you cannot see”, with a strong focus on increased transparency. The majority of the 17 recommendations in the interim report relate to improved transparency of the tax affairs of corporate taxpayers. This is a significant step in the right direction. Recent experiences in the war on corporate tax avoidance both in Australia and overseas confirm that “information is power”. Most notably, we have seen increased transparency changing the behaviour of multinational enterprises as well as inducing governments to act.

Government cracks down on tax avoidance through foreign investment rules

The Turnbull Government announced yet another measure aimed at addressing tax base erosion and profit shifting, placing additional requirements on new foreign investment under the existing national interest test. In the last 12 months Australia has seen various reforms within the tax system. However, this latest initiative is a shift as it links Australia’s tax regime with its foreign investment regime. It sends a broader signal to the market that Australia will look beyond the collection of tax revenues to a consideration of national interest.