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Tax Office wary of 'Double Irish Dutch Sandwich' ploy

THE government is preparing for an assault on companies such as Google that funnel their Australian income through low-tax countries such as Ireland and Singapore.

Assistant Treasurer David Bradbury will outline the plan at a conference in Sydney on Thursday.

His speaking notes refer specifically to Google and to a technique known as the "Double Irish Dutch Sandwich", which involves routing income between Ireland and the Netherlands.

"This is not just about dealing with illegal activity,'' he will tell the Institute of Chartered Accountants national tax conference. ''This is about how the drivers of new business models in the information age are presenting great challenges for governments trying to make sure that companies are paying their fair share.

"The way people do business is changing, and we need to ensure tax systems keep pace, because it's not fair if a multinational company pays much less tax than an Australian company.


"This is a challenge for other nations as well, as we have seen from recent revelations in the United Kingdom, where a parliamentary committee is looking into the issue.

''That means we need to continue our global co-operation to make sure that there is global consistency with the way we tackle this issue." Mr Bradbury will ask Treasury to start

work on a scoping paper outlining the challenges posed by multinational corporations that use foreign subsidiaries to collect Australian income.

He will convene a specialist reference group made up of business leaders, tax experts, academics and community representatives to examine measures to combat the practice.

"We do not want to see a future where hard-working Australian families and businesses are having to pay disproportionately high taxes because multinational corporations are not pulling their weight," he will tell the conference.

Company documents filed with Australian, European and Asian authorities show the Australian arms of Apple, Google and eBay are part of complex networks of subsidiaries held by their US parents through intermediary companies in tax havens.

In April the Tax Office hit Apple with a $28.5 million bill for back taxes. Google Australia declared a loss of $3.9 million last year, and paid just $74,176 in Australian tax.