Andy Bubb, Senior Lawyer and Arek Buczek, Lawyer, Controversy & Litigation, KPMG Law, examine whether a recent raid by French tax authorities could mark the beginning of an increasing willingness by tax authorities to use their access powers more frequently.
Last week French authorities knocked on the door of Google’s Paris headquarters to conduct a tax raid of the multinational giant. Google has been subject to review in relation to activities performed by it in France, including whether its staff were finalising contracts with local clients.
The raid was heavily resourced and included investigators from the central office against corruption and tax fraud, the financial prosecutor’s office and 25 information technology specialists. It marks an escalation of an investigation that has been underway since June 2015.
Could this raid in Paris show a willingness for tax authorities around the globe to use their access powers more frequently?
In Australia, the Australian Taxation Office (ATO) has broad powers to access premises for the purpose of a taxation law and expects to be provided with full and free access at all reasonable times to any documents or information. The ATO can inspect, examine, make copies of, or take extracts from the documents.
Despite the intrusive nature of a tax raid, however, the taxpayer does have a right to be permitted sufficient time to seek legal advice and claim legal professional privilege.
Generally, the ATO only uses its access powers if documents cannot be obtained under a cooperative approach. In 2014-15, the ATO used its access powers to enter premises on 19 occasions with prior notice and without notice on only two occasions.
In light of the recent raid on Google’s Paris headquarters, the changing global tax landscape, the focus of the Australian Government on multinational tax avoidance and the establishment of a new tax avoidance taskforce, we may well see the number of tax raids carried out by the ATO increase.
Are you ready if the ATO comes knocking?