Statement by Michael West to the the Senate Economics Reference Committee inquiry into Corporate Tax Avoidance.

It was at the last sitting day of parliament in 2015, and a few months after this Committee first convened, when two amendments were passed in the Senate to the Combating Multinational Tax Avoidance Bill.

One was dubbed “The Kidnapping Amendment” as it dealt with the harrowing fear that billionaires would be snatched by gangs of murderous thugs if they were compelled to file their Form 388s with the Australian Securities and Investments Commission (ASIC).

The other, a more boring amendment but of far greater public import, was a transparency measure. From now on, multinational companies would be required to lodge proper “General Purpose” financial reports, as do local companies listed on the ASX such as BHP, Rio Tinto, Westpac or Woolworths.

Over the years, with the help of former UNSW accounting academic Jeff Knapp, we have identified a large number of multinationals, many of them household names – the likes of Adidas, News Corp, Pfizer, Serco, BUPA, Glencore – which had secretly, and with no explanation by their directors or auditors, “gone dark”; changed the way they reported overnight. Without explanation, they had suddenly ceased to produce proper financial reports and begun to lodge “Special Purpose” reports where disclosure is poor and tax avoidance rabid.

The Senate’s General Purpose disclosure amendment had been enacted in November 2015 to address this debacle in transparency, which brings us to the kicker. A source from the Tax Office confided to this reporter recently that multinationals had found a loophole in the amendment.

It is a shameless loophole. Mocking the intention of Parliament, mocking the spirit of its lawmakers and mocking the laws of this country, multinationals have been advising the Australian Tax Office (ATO) that they will not file General Purpose financial statements for their top entities in Australia. Rather they would file General Purpose financial reports of their parent companies in London, New York or Delaware – totally meaningless filings in other words, annual reports which are already available on their own company websites.

Australia rarely rates a mention in these annual reports issued from head office. Most multinationals operate in 70 countries or more.

If multinationals operating in Australia – and the global audit and tax firms which advise them (KPMG, EY, Deloitte and PwC) – fail to comply with the intention of the transparency laws, the laws ought to be amended or regulators ought to issue guidance to protect the interests of regular tax-paying Australians against the rampant tax avoidance industry.


1. Instructions to ASIC to issue guidance notes to all multinational companies requiring them to lodge General Purpose financial statements for their head entities in Australia this year.

2. ASIC guidance also to be issued to stop multinationals from filing holding company accounts which are not consolidated, e.g. Goldman Sachs, BUPA, Glencore.

3. Independent working party to be established to review the rise in secrecy, the decline in reporting standards and the conflicts of the AASB, ASIC and the Big Four Global audit firms. (Note the AASB promised it would do something about the Special Purpose reporting plague in this Senate hearing room two years ago and has yet to deliver.)

3. Study to be conducted on benefits and feasibility of breaking up the Big Four accounting firms along audit and tax lines and compelling them to disband their opaque partnership structures and begin being “accountable” by producing financial statements.

Editor’s Note:

Michael West is at the Senate Economics Reference Committee inquiry into Corporate Tax Avoidance this morning (4 July) to report on the latest ploys by multinationals and Big Four Accounting to exploit legal loopholes and mock the intention of their laws only recently enacted. Calling for Big Four break up.

Oligarchs of the Treasure Islands