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Multinationals already working the angles on ‘Google Tax’

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“We are aware of taxpayers seeking to use artificial and contrived interim arrangements with the sole aim of avoiding a potential MAAL liability from January 1, 2016,” the ATO said in a taxpayer alert.

In 2014 Shell Australia paid $534 million in finance costs on $12.7 billion of debt owed to offshore Shell companies. But its submission to the Senate tax inquiry showed that while it paid that $169 million interest to a Bermuda associate, the biggest cost was $260.7 million paid to a Shell company in Luxembourg for cross-currency interest rate swap costs.

The payments for cross-currency interest rate swaps do not attract withholding tax, which means the full 30 per cent saving from the funding structure is realised.

It is this sort of funding structure that the ATO says it is reviewing, based in part on its win in the Chevron case last year.

By Neil Chenoweth

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