The Australian Taxation Office (ATO) has been successful in the Full Federal Court decision of Singapore Telecom Australian Investments PTY Limited (SingTel) vs Commissioner of Taxation.
This decision confirms SingTel claimed a transfer pricing benefit for deductions based on interest paid on loans between two of its subsidiaries regarding its acquisition of Optus in 2002.
Deputy Commissioner Rebecca Saint said this decision is another substantial win for the ATO and the Tax Avoidance Taskforce.
‘This decision is another win for the Tax Avoidance Taskforce towards maintaining the integrity of the Australian tax system and holding multinationals to account’.
‘Whilst many large businesses are meeting their tax obligations, there are some that continue to engage in profit shifting practices. Taxpayers that set excessive prices for their related party dealings to shift their profits to low-tax jurisdictions should be on notice,’ said Ms Saint.
The impact of the Tax Avoidance Taskforce in the market has been to reduce the proliferation of profit shifting, including transfer mispricing. ATO intervention has resulted in taxpayers shifting their tax position and increasing their revenues being taxable in Australia.
‘We estimate that the Taskforce has removed around $45 billion of past and future interest deductions from the tax system. This results in billions of dollars of additional tax being collected in Australia,’ said Ms Saint.
Since the Tax Avoidance Taskforce commenced in 2016, it has helped secure more than $29.5 billion in additional tax revenue from multinational enterprises, large public and private businesses.
