According to the update, detailed in the ATO's Large Business Bulletin, the tax office has begun a four-year International Structuring and Profit Shifting (ISAPS) compliance program, focusing on a number of companies that have undertaken international restructures or have significant cross-border arrangements.
Applying a risk-filtering process to the 2012 International Dealing Schedule to identify high-risk cases, the ATO has identified 86 companies whose structures and arrangements are now being reviewed to see if they represent an inappropriate shifting of profits outside of Australia.
The ATO update said the regulator has formed a new joint compliance approach with several other jurisdictions to investigate the global tax planning of multinational enterprises (MNEs) in the digital economy.
“Using the intelligence of each jurisdiction, we have been able to identify and will now look closer at the specific global tax planning arrangements of eight e-commerce enterprises,” it said.
“Through our compliance initiatives, we will continue to work closely with Treasury to update the Organisation for Economic Cooperation and Development and the G20 on our progress.
“It is expected this work will help to identify where the law works and where it requires change, domestically and internationally”.
In his speech to the Tax Institute of Australia conference in Hobart last month, commissioner of taxation Chris Jordan said the ATO is focused on working more closely with partner tax agencies to map the global operations of MNEs.
“Just as modern corporations think globally when planning their tax affairs, tax administrations like the ATO need to think globally when addressing company tax risks,” he said.