The problem with transfer pricing is that it is not an exact science. Global companies put their brand and IPs in tax havens and then charge an "arms-length" transfer price for the use of the brand and IPs. The problem is that the royalties charged are so high that little tax is paid in Australia.
It is not easy for the ATO to challenge the royalty payments as these firms are backed by Big 4 and global law firms. Often it is deliberately structured in a highly complex and very convoluted ways so that the cost of enforcing compliance is extremely high.
In some cases where the transfer price is easier to establish e.g.. interest on loans, the ATO has had some big wins e.g., Chevron. As an Aussie taxpayer and resident, I am hoping Chevron will set a precedent for Australia to get their fair share of tax from these multinationals.
Btw, nobody knows who audits the Big 4. They are a law unto themselves. In fact, they assist in drafting tax legislation! Guess who helped in drafting the CFC provisions and GST regime?
