Australia has announced reforms aimed at significantly increasing penalties against promoters of questionable tax schemes and strengthening regulatory powers. The decision comes in response to a scandal involving leaked fiscal plans by PwC Australia.
The scandal, which came to light in January, involved the leak of confidential government documents by a former partner at the professional services firm, resulting in the departure of 12 PwC Australia partners, including the CEO. The controversy also led to the sale of PwC’s government consulting wing for $A1 and implicated clients such as Google, Uber, and Facebook.
Under the proposed reforms to be introduced this year, the maximum penalty for promoting tax exploitation schemes will be raised by 100-fold, amounting to A$780 million ($510 million). Additionally, the changes will make prosecution easier by expanding the application of rules that have been used only six times so far.
Notably, PwC Australia was not fined for the breach under the existing rules, and the reforms will not be applied retroactively, according to a Treasury spokesperson. The government stated that the PwC scandal exposed significant weaknesses in the country’s regulatory frameworks, prompting the need for these stricter measures.