Australia launches new strategy to tackle tax havens
October 28, 2022
Australia’s government has announced new transparency rules in a bid to crack down on companies shifting their profits to tax havens.
It will force multinational corporations to publicly disclose their country-by-country reporting, a method designed to expose and deter exploitation of the system.
The move has been praised by the Tax Justice Network (TJN), which first proposed the accounting standard in 2003.
Economist and TJN chief executive Alex Cobham believes Australian Prime Minister Anthony Albanese and his administration have shown “true leadership” by adopting the approach.
Cobham said: “Australia is the first country to cast away the anonymity shamelessly granted to corporate tax abusers and require multinational corporations to come clean about their taxes.
“Australia loses over USD $5 billion in tax every year to multinational corporations shifting profit into tax havens – that’s more than the amount the government will spend on the newly-announced childcare package over the next five years.”
Cobham believes Australia has also shown strength by moving away from a previously used “watered-down version of the transparency measure” which was put in place by the Organisation for Economic Co-operation and Development (OECD).
OECD is an intergovernmental organisation with 38 member countries which was founded in 1961 to stimulate economic progress and world trade.
Cobham added: “By going beyond the OECD and requiring multinational corporations to disclose their profits and tax publicly, Australia’s new tax transparency measure will help the country recover the billions it loses to tax havens every year.
“Multinational corporations will no longer be able to cook their books without everybody seeing it.”
Cobham described the public country-by-country reporting measure as “kryptonite” to tax havens and urged European and American leaders to follow the example set Down Under.
He added: “We urge the EU to draw courage from Australia’s example and raise their own forthcoming requirement for public reporting to include all countries – not only EU member states.
“We also urge the US to follow suit, starting with the Securities and Exchange Commission, which we understand is considering making public country-by-country reporting a requirement for all US-listed companies.”
Last Updated: 28 October 2022