Pitcher Partners Advisors Proprietary Ltd ABN 80 052 920 206
Ref: AMK:lg
Level 13, 664 Collins Street Docklands VIC 3008 Level 1, 80 Monash Drive Dandenong South VIC 3175
5 September 2022
Postal Address GPO Box 5193 Melbourne VIC 3001 p. +61 3 8610 5000
Director International Tax Branch Corporate and International Tax Division Treasury Langton Cres PARKES ACT 2600
By Email: MNETaxIntegrity@treasury.gov.au Dear Sir/Madam MULTINATIONAL TAX INTEGRITY AND ENHANCED TAX TRANSPARENCY 1.
Thank you for the opportunity to provide comments to the Treasury’s consultation paper titled Government election commitments: Multinational tax integrity and enhanced tax transparency (“Consultation Paper”)
2.
Pitcher Partners specialises in advising taxpayers in what is commonly referred to as the middle market. Accordingly, we service many clients that would be impacted by the measures proposed in the Consultation Paper.
3.
We support the Government’s commitments to uphold the integrity of the tax system with respect to multinational enterprises (“MNEs”), including improving tax transparency.
4.
However, we are concerned the measures proposed in the Consultation Paper may, if they are not appropriately targeted, have disproportionate adverse impacts on taxpayers in the middle market. In particular, it is common for domestic transactions to be structured in a way that involves debt interests (to be issued to third parties) to ensure such investors do not participate in profits of a project or transaction. We are concerned that the proposals may drive in-substance debt to be structured as equity, resulting in a significant distortion in the form of the interests being issued. We believe that this will give rise to significant complexity in the middle market in cases where there is next to no risk to the revenue.
5.
Any reforms adopted by the Government should not affect genuine investment decisions or should not result in capital allocation decisions that become distorted due to the adoption of tax-driven structures.
6.
The reforms proposed in Part 1 of the Consultation Paper relating to limiting interest deductions have the potential to significantly affect business decision and the after-tax profits of Australian middle market businesses and will ultimately call into question the feasibility of undertaking various projects (e.g. property developments).
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Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. B J BRITTEN D A THOMSON M C HAY S SCHONBERG S DAHN P A JOSE
A R YEO M J HARRISON P W TONER T SAKELL G I NORISKIN A T DAVIDSON
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