Senate Economics Legislation Committee, , 1:39:21 to 1:43:30
Inquiry into the ATO's taxation of service fees as royalties for US tech companies and potential diplomatic or trade repercussions.
Topics: Trade policy, Government spending
Speakers: Senator Nick McKim, Katrina Di Marco, Hon Katy Gallagher, Jenny Wilkinson
Uh thanks, folks. Uh, for some time US tech companies have been charging themselves service fees, um, which is basically a way to avoid their tax liabilities in Australia and shift profit out of this country and into their uh tax havens in Delaware. Uh pleasingly, the ATO is starting to muscle up to some of these US tech companies and taxing these payments as royalties. Can I ask whether you've received any representations from the US Treasury about the ATO's actions? I mean, you know, the tech bros are upset, so Trump's upset. So the US administration is upset, so the US Treasury is upset. Ms. Wilkinson, have you received any correspondence either from the US Treasury or any other arm of the US government or any US tech companies about the ATO's actions?
Marco.
Yeah, thank you. Senator, um, I would have to check if we've received any written correspondence since the ATO's update of its software or since the announcement of the ATO's ruling on software royalties. We had certainly received representations from the US previously, because the ATO had been telegraphing this and there'd be conversations for some time. I'm so I'm not sure if we've seen written representations. I'm aware that at the uh I'm going to get this wrong, I think it was called the Institute for Fiscal Affairs or Institute of Fiscal Studies uh conference that was in Melbourne last week, there was certainly a representative from the US Treasury there, and she certainly made remarks to that effect. I'm just not sure if we've received correspondence from it, but this is a long-standing conversation with the US. The ATO's uh ruling was almost the um uh the last phase of that conversation, but I would expect it to continue given her statements that she made last week.
All right, well, Ms. Wilkinson, I mean you'd expect that if uh a letter arrived from the US Treasury to um you know the government or to uh your department that that that would cross your desk, wouldn't it?
I would have expected so, Senator. And can you recall whether I don't recall I don't recall receiving any correspondence uh about um about this ruling?
All right, thanks. Could you take on notice, please? Um whether you have to happy to.
Yeah, we'll get back to an example of the process.
Sorry if I could just say on that issue, including prior to uh the ATO's announcement and obviously post the ATO's announcement, Minister, you received any correspondence on this matter?
Um not that I am aware of, but I will check just in case I don't believe so.
All right, thanks. Um could you also um take on notice whether you're able to provide any correspondence you've received to the committee?
If we have received it.
Yep, if you've received it. Thank you. Um and are you aware that uh when France proposed uh a digital tax in the recent past um Trump threatened a retaliatory increase in tariffs and France actually backed down uh from their proposal to to implement um their new uh digital tax? I guess, Minister, for you, are you concerned that uh we might be facing a similar tactic from the Trump administration and will your government uh back in the ATO to the Hilt in its attempt to make the tech bros pay a fair rate of tax on the profits they generate in this country?
Uh so I think the PM has always been clear when matters like this are raised that we would always take decisions in Australia's national interest.
Yeah, but does that include backing in the ATO or are you going to collapse? Because I mean you've got a Prime Minister who astoundingly thinks taking photos selfies with uh Donald Trump's our national interest and we support the work of the ATO. I beg your pardon. What was the last thing you said?
I said we're and we support the work of the Australian Tax Office.
And you'll continue to support them if they try to make US tech companies pay a fairly subprofits generated in the hypothetical.
I've told you the government's position is that we make decisions in the national interest.