Australian clients to get 'scary' letters in tax crackdown on multinational
Tax authorities in five countries on Thursday staged an unprecedented “day of action” against a multinational financial institution that included raids, demands for information and warning letters to clients.
The action – taken by revenue authorities in Australia, Canada, the Netherlands, the UK and US – follows a year-long investigation into the company, which is based in Central America and is believed to have many thousands of clients around the world.
It is the first overt action taken by the Joint Chiefs of Global Tax Enforcement, or J5, a body set up in mid-2018 to help revenue authorities fight tax crime and money laundering.
Clients of the financial institution “may be using a sophisticated system to conceal and transfer wealth anonymously to evade their tax obligations and launder the proceeds of crime,” the J5 nations said in a joint statement issued on Thursday evening.
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Further civil, criminal and regulatory action is expected in each of the member nations as a result of Thursday’s action, the J5 said.
It is also understood the J5 has a number of other investigations under way.
As part of the investigation the Australian Taxation Office (ATO) has used the expertise and investigative powers of the Australian Criminal Intelligence Commission, which has the ability to demand documents and grill people under oath at secret hearings.
ATO deputy commissioner Tim Dyce said that as part of the day of action the ATO sent letters to a small number of Australian clients of the company, which he would not name.
“It’s going to be scary for the people who receive the letters,” Dyce told Guardian Australia. “They won’t expect this.
“We’re starting off with a small number of enquiries and we’ll extend our activities after that. We encourage people to come forward and talk to us if they think they may be affected, and it can result in a faster and slightly less painful resolution.”
The investigation was triggered by information obtained by the Netherlands Fiscal Information and Investigation Service.
It has a reputation for aggression, mounting 2017 raids on the offices of Swiss bank Credit Suisse that seized millions of euros in cash, as well as gold bars, art and jewellery; sparked additional action in Australia and the UK; and annoyed the Swiss authorities.
The current J5 investigation is understood to be unrelated to the Panama Papers leaks, which in 2016 exposed the role of Panamanian law firm Mossack Fonseca in the use of tax havens by the rich and powerful.
However, leaks such as the Panama Papers and 2017’s Paradise Papers have helped fuel efforts by taxation authorities to curb the leakage of revenue to tax havens.
Australia’s efforts to grapple with the murky world of offshore finance were kickstarted in 2004, when ATO officers seized a laptop containing client information from the Melbourne hotel room of Jersey accountant Phillip Egglishaw.
The seizure helped lead to the creation in 2005 of Project Wickenby, an operation involving ATO officers, federal police and other law enforcement agencies that ran until 2015, when its role was taken over by the serious financial crime taskforce.
During its decade-long run Wickenby reaped $985m in tax revenue and resulted in 46 convictions.
