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Tax authorities' cross-border aggression


Australian companies that operate across borders feel under pressure from increasingly aggressive tax authorities, according to EY’s 2014 Tax Risk and Controversy survey.

By Michael Masterman 8 minute read

The survey found that 68 per cent of companies feel tax audits have become more aggressive in the past two years, while the same percentage of the largest companies (those with annual revenues in excess of US$5 billion) reported that tax authorities have increased their focus on cross-border transactions over the same time.

Three quarters (74 per cent) of these largest companies surveyed said they believe some countries already see the very existence of the OECD's Base Erosion and Profit Sharing (BEPS) project as a reason to change their enforcement approach even before any recommendations are passed into national law.

EY tax controversy partner Howard Adams said that despite operating in an environment of limited and reducing resources, the ATO is now taking an increasingly proactive approach when looking at cross-border transactions.


“The ATO has previously acknowledged that they have an identified group of 86 “high-risk” multinationals, but many more companies are concerned about tax agency coordination across geographies,” Mr Adams said

“Tensions described in previous surveys pale in comparison with the tax risks that are currently being identified,” he added.

The report also found companies view the potential lack of coordination by national governments around the BEPS project as a major risk, with more than four out of five (81 per cent) companies surveyed expecting already heightened tax risks to accelerate in the next two years. 

The survey also revealed that 61 per cent of the largest companies now fear that double taxation will increase in the next three years.


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