Content area
Abstract
The outcome of the Chevron appeal could set a precedent for future cases The Australian Tax Office (ATO) will go after other multinationals that it believes to be guilty of tax avoidance after winning a landmark transfer pricing case against global oil and energy company Chevron over shifting profits to the US. " "Subject to the outcome of any appeal by Chevron to the High Court of Australia, the estimated A$420 billion of related party borrowings between Australian subsidiaries and their overseas parents and the billions of dollars in deductible interest payments relating to these borrowings will continue to be carefully scrutinised by the ATO," said Martin Caplice, Oceania leader of tax controversy at EY In Sydney. [...]the interest as income in the hands of the US entity was not taxable in the US because CFC was a wholly owned foreign subsidiary of CAHPL. [...]the dividends declared by CFC from the profits made in the US were not assessable income in the hands of CAHPL. "The Federal Court with its latest Chevron decision has set ground-breaking precedent on the pricing of related party cross-border loans, with ramifications not just for Australian taxpayers," said O'Shannessy. "The Court held again for the Tax Commissioner, against Chevron, and ruled on two key international tax standards for cross-border transactions: the requirements to price 'at arm's-length', and as 'independent enterprises' - standards common to all OECD-based tax systems. " "If we assume for a moment that the High Court of Australia upholds the reasoning of...