Australia foils tax avoidance after PwC leak

Sydney — Australia’s tax office foiled several attempts by multinational firms to subvert new tax avoidance laws months after confidential drafts were leaked by a then-PwC Australia partner, a spokesperson told a parliamentary hearing on Tuesday.

The “big four” firm is reeling after a former Australian tax partner who was consulting with the government on laws cracking down on corporate tax avoidance shared confidential drafts with colleagues to drum up business around the world.

Shortly after the introduction of the Multinational Anti-Avoidance Law in 2016, the tax office noticed several multinationals “suspiciously and quickly” restructuring their affairs, Australian Tax Office (ATO) commissioner Chris Jordan told senators on Tuesday.

The unnamed firms ultimately readjusted their structures after the ATO issued notices, saving the taxpayer roughly A$180m annually, said Jordan.

“We got on top of this early and stopped any tax loss in Australia from this egregious behaviour,” he said.

PwC Australia frustrated ATO investigations with “highly ambitious if not false” legal privilege claims, another tax office official told the hearing.

The firm’s acting CEO Kristin Stubbins, who took the job after her predecessor resigned over the scandal earlier in May, on Monday apologised in an open letter and said nine unnamed partners had been directed to take leave.

Amid calls to ban the firm from lucrative government contracts, treasury secretary Steven Kennedy told senators earlier in the day that the breach was “clearly disturbing” and the department would review a PwC audit contract worth almost A$1m that expires at the end of 2023.

“We’re going to very carefully consider our future procurement arrangements as they come up,” said Kennedy, whose department last week referred the broader breach to police.

Stubbins’ open letter on Monday said at the time of the tax policy leak, “there was a culture of aggressive marketing in our tax business” and some of the group’s leaders “allowed for profit to be placed over purpose”.

Reuters