Australia gets tough on tax-dodging MNCs

THE Australian government seems to have finally resolved to tackle the hard business of getting large multinational corporations to pay their fair share of local taxes. If news reports are accurate, there will soon be new legislation to curb the phenomenon of "thin capitalisation" - whereby MNCs borrow at high interest in high-tax jurisdictions and lend at zero interest to their own entities located in tax havens, for the sole purpose of minimising, or avoiding, local taxes.

The immediate trigger to act on this issue was an expose in a leading Sydney newspaper which lifted the cloak of secrecy surrounding the tax affairs of Glencore, the biggest miner and exporter of thermal coal in Australia. The report revealed that on A$15 billion (S$17.5 billion) of income in the last three years, Glencore's Australian branch ha…