Published on the 11/09/2014 | Written by Beverley Head

Australia’s Treasurer has signalled his intent to ensure overseas technology companies pay their fair share of tax, and also are stopped from price gouging local consumers…

Treasurer Joe Hockey has instructed the Commissioner of Taxation to “double his efforts” and undertake more audits of multinational companies “considered a risk to Australian tax collections”.

He has also called on the ATO to take a closer look at the pricing of technology in Australia.

A 2013 Australian Government investigation confirmed that Australians pay 50-100 percent more than overseas peers for technology.

The House of Representatives Standing Committee on Infrastructure and Communications report At What Cost? IT pricing and the Australia tax found that for the most part prices were high because of vendors’ regional pricing strategies and an approach which saw them charge “what the market will bear”.

This price disparity has also been held up as an explanation, if not justification, for why online piracy levels remain relatively high in Australia.

In a curtain raiser to the meeting of G20 finance ministers being held in Cairns later this month the Treasurer has again confirmed that Australian consumers often pay much higher prices compared to US consumers for identical IT hardware, software, music and games. While the Government is not able to demand price parity, it can apply a blowtorch – in this case tax office audits – to other areas.

Hockey referred to a flurry of media reports regarding international companies which supplied high priced goods to local consumers but still pay relatively little tax in Australia. Apple and Google have received particular attention for the apparent disparity between their Australian profits and tax bills.

The treasurer warned that the tax commissioner would take a close look at where profits were being made locally by multinationals and shifted overseas, and whether the transfer pricing rules had been properly applied.

“I have also asked the Commissioner to double his efforts in applying our rules so that his officers are able to look at these price differences to ensure that profits earned in Australia are taxed in Australia.

“We are determined that multinational taxpayers will not be able to avoid their Australian tax obligations by shifting their international profits to low tax or no tax jurisdictions.”