Foreign banks' representatives yesterday rejected comments made by the tax commissioner, reported in the Australian Financial Review, that their activities were high on the Australian Taxation Office's "risk radar".According to the report, tax commissioner Michael D'Ascenzo is concerned about financial engineering by foreign banks; cross-border transactions involving transfer pricing; and transactions involving trademarks and other intellectual property.The bankers said any suggestion that they were involved in transfer pricing (where the loss-making parent company sells a written-down asset at an off-market price to a profitable Australian branch company that can make use of the tax losses) was ridiculous given the extent of regulatory oversight here and overseas.They said the ATO should be prepared to show evidence of such transactions if it was going to make such claims.However, they conceded that the ATO was right to be concerned about a market in structured financial products, involving asymmetric swaps, which operated between 2007 and last year. But they pointed out that the banks involved in these deals had sought ATO product rulings.And on the question of deals involving intellectual property (where trademarks or brands were sold to companies in tax havens and then leased back, with a tax deduction claimed for the leasing cost) bankers said the local branches of foreign banks usually did not own such assets.The executive director of the Australian Financial Markets Association, Duncan Fairweather, issued a statement saying: "We have an ongoing dialogue with the ATO at industry level and we are unaware of any evidence that foreign banks are not systematically meeting their tax obligations."Aggregate APRA data indicates that foreign banks do pay significant taxes in Australia in terms of their profits."The OECD has identified tax compliance risks that might arise consequent to global bank losses as a result of the GFC. "It is appropriate for the ATO to take account of the OECD's advice in its compliance activity but in our experience foreign banks have understood the ATO's previous messages about the need to be prudent in managing these risks and reflect this in managing their tax affairs."