Luxembourg tax avoidance undercut from down under

Seemingly solid tax avoidance strategies are the next targets in the War on Tax Havens. At the moment when “tax rulings” are under scrutiny, Australian tax authorities have issues with the strategies played around the ownership of the Myer department stores chain.

In a complicated square dance, where financial engineering set up structures in the Netherlands, Luxembourg and the Cayman Islands, a $1.5 billion profit went untaxed. This is of course heartbreaking for Australian tax authorities. Many other tax departments around the world would feel the same pain. And I bet that they have their own case load and are watching. Eventually some sort of G 8 to 20 will find the Australian approach as extremely clever. This is what is going to happen:

  • Some G 8 to 20 will show how upset they are about tax avoidance. And the missing money.
    They will come up with a very sophisticated equation: tax avoidance = tax evasion.
    They will find an international body to set up new rules copied on Australia’s. OECD, UN or really anything. It could be Red Cross as it is about bleeding money.
    Tax havens will scramble to give the illusion that they comply with the bullies’ new equation.
    The Big Four will scramble to find ways to give the illusion of compliance with the bullies’ new equation.
  • But business will no longer be what it used to be.

This is a wonderful illustration of a real case that is supporting my speculation above:

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