CLANCY YEATES July 27, 2012
MINING companies have attacked a government plan to secure up to $1.9 billion in tax revenue through tougher laws on global profit-shifting, saying the changes threaten to increase uncertainty in the industry.
In a move that has raised the ire of companies including General Motors and GE, the government is set to make retrospective changes to laws on ''transfer pricing'' - trade between different parts of a global company. The changes will apply to tax disputes going back to 2004.
The general manager of transfer pricing at Rio Tinto, Richard Atkinson, said yesterday the changes raised the ''significant risk'' that companies would face ''double taxation'' across different jurisdictions.
BHP's manager of tax in Australia, Don Spirason, said the miner opposed the changes ''in principle'' because they would lead to more uncertainty. ''Perhaps the motivation for the legislation is that it will remove uncertainty, but from our perspective it increases it,'' he said in Canberra.
While government senators suggested the companies were trying to minimise their tax, Minerals Council of Australia deputy chief executive John Kunkel said the laws failed the ''critical tests'' of transparency and fairness.
''Retrospective change to taxation laws damages investor confidence in a way that makes Australia a less attractive location for capital investment,'' Dr Kunkel said.
The government has defended the laws by saying they are only designed to clarify Parliament's intention. Treasury says up to $1.9 billion is at risk if they are not passed.
Labor senator Doug Cameron suggested that the big companies' main gripe with the changes was not one of principle but that they threatened to eat into profits, asking Rio Tinto's Mr Atkinson: ''It's not just a matter of principle, is it? It's about money.'' Mr Atkinson conceded that it was ''about dollars'' but companies also needed certainty about global tax arrangements.