"Chevron has long been accused of dodging tax in Australia, and lost a Federal Court case in 2017 against the Australian Taxation Office over the interest rate it charged on inter-company loans. Last year it paid $US654 million to the ATO under a partial settlement of the dispute". "The Chevron case should be seen in context as the first big dollar transfer pricing case taken by the Australian Taxation Office (ATO) to the Federal Court. It is also the first test of the retrospective Subdivision 815-A laws introduced by the Australian Government in 2012, explicitly on the request by the ATO to shore up Australia’s transfer pricing regime after the loss by the ATO in the SNF Australia case in the Full Federal Court (which was argued under the old Division 13 regime). It also should be seen as part of the ATO’s wider messaging that it is willing to take multinationals to Court on transfer pricing",
It is complex but I doubt that there is one simple solution. One problem is a company that makes a major loss that would normally be an allowed tax deduction under subsequent years (a different scenario). If it then uses that against any profit each year to get back on top, I am not clear why it should be assumed to be making a profit. Although, seven years.....
Certainly something needs to be done where international transfers to dodge tax are involved.