THE AUSTRALIAN GOVERNMENT has announced new requirements on multinational corporations to publicly disclose their country by country reporting, a type of reporting method designed to expose and deter multinational corporations from shifting their profits to tax havens.
Reacting to the announcement made on 25 October, Alex Cobham, chief executive at the Tax Justice Network, said: “Australia showed true leadership today by being 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.
“We know broadly how much tax Australia loses to corporate tax abuse every year, but not which multinational corporations are behind it. That’s because Australia previously used a watered-down version of the transparency measure it adopted today that allowed multinational corporations to stay anonymous when reporting their profits and tax.
“The watered-down transparency measure was set by the OECD, a club of rich countries, some of which are the world’s biggest tax havens, that has been setting global tax rules for decades. By going beyond the OECD today 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.
“The measure will also help lower income countries that have been locked out of accessing data by the OECD – despite the fact that these are the countries that lose the greatest share of tax revenues to multinational corporations’ abuse. The tax that lower income countries lose each year to tax havens is equivalent to nearly half their combined public health budgets.
“Public country by country reporting is tax havens’ kryptonite. When the Tax Justice Network first proposed country by country reporting in 2003, it was designed to specifically eliminate the secrecy that gives multinational corporations the power to hide their profit in tax havens. Some countries have adopted hollow forms of country by country reporting since then that keep that secrecy intact, negating the point of the transparency measure. But a number of multinational corporations in recent years have voluntarily disowned the secrecy and started publicly disclosing their country by country reporting under the Global Reporting Initiative (GRI) standard, the gold standard for public country by country reporting.
“We urge Australia to deliver the full benefits of their leadership by adopting the GRI standard for the required reporting, which is supported by investors and a growing number of leading multinational corporations because it provides much more rigorous and robust data than the heavily-lobbied OECD standard.
“We urge the EU to draw courage from Australia’s example, and to raise their own forthcoming requirement for public reporting to include all countries, not only EU member states.
“We 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.
“Finally, we applaud the work of our partners TJN-Australia and CICTAR in supporting the development of Australia’s leadership against multinationals’ tax abuse, and the Australian Labor Party for adopting and sticking to its manifesto commitments. The Australian government can show further leadership by supporting the start of negotiations on a United Nations tax convention, now being discussed at the UN General Assembly, which could finally deliver the effective and inclusive, global tax reforms that are required.”
The State of Tax Justice 2021, published by the Tax Justice Network with the Global Alliance for Tax Justice, Public Services International and FES, found that the world loses $483 billion in tax a year to global tax abuse committed by multinational corporations and wealthy individuals.
* Read The State of Tax Justice here.
* More information on country by country reporting here.
* Source: Tax Justice Network