Labor has announced its plans to adopt a “responsible and measured” multinational tax avoidance package to improve transparency and close tax loopholes, if elected.
It plans to implement anti-avoidance measures proposed by the Organisation for Economic Co-operation and Development (OECD) that are already backed by over 130 countries worldwide.
The measures include a minimum 15 per cent tax on profits by multinational companies, fairer distribution of profits (particularly from digital firms), and limiting debt-related reductions to 30 per cent of a company’s profits.
Other measures outlined in Labor’s economic statement include public reporting of a multinational firm’s tax payments in their jurisdictions and a public registry of beneficial ownership to address tax liabilities.
“The registry will show who ultimately owns, controls, or receives profits from a company or legal vehicle, even when the company is registered as legally belonging to another person, such as an accountant or a shell company,” read the statement. “This will stop individuals hiding behind complex corporate structures that avoid accountability and obscure their tax liabilities.”
Labor also plans to tackle the issue of tax havens through mandatory reporting of tax haven exposure to shareholders.
These measures are expected to raise $1.89 billion to help fund essential services like childcare, Medicare, and aged care.
“Labor understands that businesses of all sizes make important contributions to the economy, and we want to see that continue,” read the media release from Shadow Treasurer Jim Chalmers with MPs Stephen Jones and Andrew Leigh.
“These responsible reforms will even the playing field for Australian businesses, including small businesses, and help fund essential services Australian taxpayers rely on. Multinational companies operating across borders are too often able to shift profits to low or no-tax jurisdictions to avoid paying tax in countries like Australia.”
The opposition has stated that, if elected, these measures will not start before 2023 to provide time for careful planning and consultations and not burden legitimate business activity.
Multinational tax avoidance continues to be a hot topic in the upcoming elections. So far, the Coalition has extended funding to the Australian Tax Office’s Tax Avoidance Taskforce for another two years and has supported calls for an ownership register.