Commentary indicating the ATO not being on top of tax avoidance issues shows a complete lack of understanding by some industry stakeholders, the IPA said in a statement released this week.
“Focusing on the effective marginal tax rates is misguided unless observers understand the complex nature of income tax rules,” said IPA chief executive officer, Andrew Conway.
“Australia has very strong anti-avoidance rules in place to stop abuse,” he said. “We commend the ATO for their efforts in this area including current compliance activities. The ATO has had a special task force on the case for quite some time.”
However, Mr Conway said Australia’s current tax rules are “inadequate” to deal with the digital economy.
“While our corporate tax rate remains uncompetitive, the incentive to shift profits legally remains strong and this must be addressed in the short term while we await long-term global solutions; one nation on its own cannot stem the tide,” Mr Conway said.
“Countries operating unilaterally is not a good option hence emphasis on the G20 to come up with some equitable solutions to stem aggressive tax avoidance by global giants.
“Increased transparency will put global companies under the microscope and subject to greater scrutiny by the regulators and the public. This, over time, may change behaviours as corporate entities may not want to be labelled tax dodgers; a label that may detrimentally impact their reputation.”