Dr Tadmore said the ATO is “certainly one of the most assertive and sophisticated authorities” in the world, but “other tax authorities are catching up with increased powers and focus”.
“It is happening everywhere. It is happening in Asia where they traditionally were not so strong in transfer pricing, and in Europe,” he said.
Labor’s tax haven blacklist
Labor has made global tax structures a key plank of their election campaign with Labor leader Bill Shorten claiming the Coalition’s “diverted profits tax” has not been effective.
Labor has vowed to stop multinationals getting a tax deduction when they funnel intellectual property royalties to low-tax jurisdictions in a move that could save taxpayers up to $2.3 billion over the next 10 years.
“Tax and transfer pricing face the greatest disputes because in many cases the issues are novel and have not been tested before,” Dr Tadmore said. “IP transfer pricing is a classic example, because how do you price branding, copyright, licence agreements and knowhow?
“Australia will try but other countries will try as well, so that is where you can see there will be some tension.”
Shadow assistant treasurer Andrew Leigh has also promised a European Union-style blacklist of tax havens to be drawn up as a “first-order priority” by a future Labor government.
If Labor wins on May 18, Labor will amend the Corporations Act to require companies to declare to shareholders any dealings in “international material risk jurisdictions”.
Labor has also promised to draw up new guidelines for “responsible investment” by super funds to ensure they are transparent about their dealings in tax havens.
“When you have a joint venture with investors in many countries sometimes it is easiest to set up in a tax-neutral jurisdiction, so everyone can pay tax in their own country,” Dr Tadmore said. “But global multinational firms today are more worried about double taxation than tax minimisation.
“When you go to a tax haven you have to assume it will be attacked and challenged and looked at very closely, so if a tax haven used to be a haven, today it is a red flag.”
Tim L’Estrange, the head of Jones Day’s Melbourne office, said while they have previously not offered any tax services, the move to poach Dr Tadmore and his team is part of a concerted effort by the firm to beef up their capabilities in Australia.
One major Jones Day client is Chevron with the laws tested in the landmark tax case now surpassed by new ones with another court challenge likely to be on the cards in the near future.
“I would not be surprised if a case on the new regime – Division 815B – finds its way through the system all the way to the High Court in due course,” Dr Tadmore said at the time.