PwC implicated in Australia in tax evasion scandal
PricewaterhouseCoopers' public slogan is “building trust in society and solving important problems”.
The Australian branch of PricewaterhouseCoopers (PwC) is accused of misusing classified government tax information for business purposes, creating a crisis that threatens to spread beyond national borders. The scandal is reported by the Guardian , and by SCMP .
While the scandal centers around Australia, PwC has used its global network to profit from insider information, involving other parts of one of the largest professional services firms in the world.
His admitted failings are now the subject of a police investigation, and governments around the world will take notice against a backdrop of increasing reliance on private advisers to formulate public policy.
In 2015, now former PwC consultant Peter Collins, head of international taxation at the Australian subsidiary, was helping the federal government in Canberra design tougher tax laws for multinationals.
Australia's treasurer at the time, Joe Hockey, was concerned about the rise of opaque structures such as the "Irish and Dutch double sandwich", which involved sending profits through an Irish company, then to a Dutch company and back to another Irish company creating a perfect European tax haven that we know quite well.
Such schemes were particularly popular with US tech companies, including Google, which later admitted it no longer uses this evasion tool.
Collins, who had signed confidentiality agreements with the Australian government, provided information about the government's plans to PwC staff both in Australia and overseas. The firm used this information to give more than a dozen U.S. companies early notice of the changes, earning additional fees and potentially depriving Australia of tax revenue.
The question of which colleagues received Collins' communications, and what they did with the information, will become a central part of future investigations. Meanwhile, the Canberra government has canceled the PwC manager's authorization to access confidential information.
Finally, now someone is also questioning the role of these mega international consultancy firms, which on the one hand have a prestigious clientele to whom they provide tax advice and on the other advise the tax authorities of the various countries on the same issue. A huge conflict of interest that finally rises to the limelight.
How did this huge scandal become public?
Collins was stricken by the Tax Practitioners Board late last year after an investigation found he shared confidential information and documents obtained from consultations with the Treasury.
The findings, which prohibit him from re-applying as a tax agent for two years, were only disclosed by a January article in the Australian Financial Review.
It has since been revealed in Senate Estimates, which allows Australian senators to scrutinize the use of taxpayers' money, that the tax office became aware in 2016 that a handful of multinationals had been "suspiciously and quick” to restructure operations in response to new rules on tax avoidance.
Specifically, the Australian Taxation Office (ATO) was concerned that PwC's proposed tax schemes for its clients threatened the ability to exercise fiscal power in the country. These companies provide this type of tax advice all over the world, including Europe and Italy.
The information was passed on to the police, but did not initially lead to a full investigation. The Treasury then referred the matter to the Australian Federal Police, citing new evidence.
The ATO also formally referred the matter to the Tax Practitioners Board in 2o2o, which resulted in a decision to strike Collins off the register. Notably, the Tax Committee forwarded 144 pages of internal PwC emails to the Senate, though the reductions have frustrated some Senators.
Faced with this scandal, PwC limited itself to opening an internal investigation against Collins and others who, in any case, had already left the company. Did anyone warn them?
Ian Ramsay, formerly the head of a federal government inquiry into auditor independence, said the response had been inadequate.
“ PwC has failed abysmally to effectively address the issue, essentially trying to minimize it. At every step they realized they needed to offer a fuller apology and take more responsibility ,” said Ramsay, professor emeritus of law at the University of Melbourne.
In early May, under intense pressure, PwC Australia chief executive Tom Seymour resigned. He was one of dozens of partners who had received e-mails about confidential information from Collins, although it cannot be argued that he used that information inappropriately.
This scandal highlights the ambiguous role of international consultancy firms, such as PwC and the like, which on the one hand have private clients whom they teach to optimize the tax burden (I used a euphemism) and on the other they position themselves as interlocutors of governments national, collecting, among other things, very sensitive confidential information.
But there is another aspect of the story, namely the fact that nation states that present themselves as "Honourable", such as the Netherlands and Ireland, then pose as facilitators of these tax avoidance activities. Obviously this problem is completely unsolvable at the European level, because it is these states that will block any legislation on this matter.
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The article PwC implicated in Australia in a tax evasion scandal comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/pwc-implicata-in-australia-in-uno-scandalo-per-evasione-fiscale/ on Thu, 01 Jun 2023 09:00:40 +0000.