by Michael McKinnon in Canberra - article carried in The Courier Mail and Adelaide Advertiser 14th January 1998
About 100 multinationals operating in Australia and each earning more than $300 million a year paid no tax in 1996, an Advertiser investigation has found.
Australian Tax Office documents reveal that just under 40 large multinational companies did not pay any tax in 1994, 1995 and 1996.
Multinationals can avoid tax by transferring profits to low or non-tax countries and also by inflating expenses or cutting income to show no profit. This was done in order to escape having to pay tax.
About 55 per cent of multinationals or companies with so-called "offshore-related party transactions" paid no tax in 1996.
The Tax Office is auditing more than 50 multinationals - which represent many more individual companies - with combined turnover worth more than #1 billion. By comparison, about 10 million salary and wage earning Australians are expected to contribute $62 billion to government coffers this financial year, with the average earner on about $30,000 paying about $6500 a year.
The Tax Office is using a mixture of audit and service programs, including consultation and education strategies, to ensure multinationals pay a fair amount of tax.
Multinationals are required to lodge a special form - a schedule 25A - with the Tax office.
In 1996, more than 7700 companies claimed multinational status.
And the number claiming multinational status is increasing according to the Tax Office, reflecting the growing global nature of trade.
Yesterday, a Tax Office spokesman said the significant number of large dollar turnover companies with offshore-related party dealings that pay litle or no tax was an issue for the Australian community.
'But it should be noted that, at the other end of the spectrum, less than 20 multinational companies paid over $3 billion in tax in 1995, some 21 per cent of all company tax," he said.
"The obvious question which arises is how can a business exist in a market over a lengthy period - sometimes decades - if it never makes a profit?"
The spokesman said the Tax Office could not reveal the identities of any of the multinationals not paying tax.
He said the Tax Office had a program of audits of transfer pricing dealings of multinational enterprises, and some 43 legislative changes had been introduced by the Howard Government to enable Australia to get its fair share of revenue.