Labor will deliver billions to the budget by closing tax loopholes used by multinationals and the top end of town, clamping down on tax havens and increasing transparency.
Multinational tax avoidance and the use of tax havens threaten Australia’s tax base. When tax revenue gets lost to tax havens, Australia loses revenue that could be used to fund vital services like hospitals and schools.
The Abbott-Turnbull-Morrison Government has spent most of its term prioritising an $80 billion tax cut for multinationals and big banks, rather than clamping down on multinational tax avoidance to fund hospitals and schools. It also slashed over 4,000 jobs from the Australian Taxation Office.
Labor has a strong record on multinational tax. We started the job when we were in government and have built a policy suite to deliver billions to the budget bottom line while in opposition.
In contrast, the Liberals and Nationals tried to take credit for large multinational tax revenues in the past few years, until it was revealed they voted against Labor’s laws in 2012-13 that delivered the revenue.
- Thin Capitalisation (Worldwide Gearing Ratio) – tightening debt-deduction loopholes used by multinational companies, generating billions in revenue over the decade, by removing the ‘arm’s length’ and ‘safe harbour’ tests, leaving the ‘worldwide gearing ratio’ as the sole thin capitalisation test.
- Royalty Integrity - stopping multinationals from getting a tax deduction when they unfairly funnel royalty payments to arms of their own company that pose a multinational tax risk.
- Thirty per cent final withholding tax on distributions from certain fixed trusts to non-residents, aligning them with treatment of distributions from companies and public fixed trusts. This complements Labor’s discretionary trust policy.
- Increased capacity for the Australian Taxation Office – providing it with compliance resources.
- Increased promoter penalty regime – allowing courts to impose fines of up to $2.1 million for an individual or $10.5 million for a body corporate, or three times the consideration received or receivable, directly or indirectly, by the entity or its associates who promote tax avoidance schemes.
- Public reporting of country-by-country reports – publicly releasing high-level tax information about where and how much tax was paid by large corporations (over $1 billion in global revenue).
- Restore Labor’s $100 million threshold for public reporting of tax data for private companies – reinstating the lower threshold that was raised to $200 million in a Liberal-Greens deal.
- Community Sector Representative on the Board of Taxation – ensuring civil society voices are heard in tax design and review processes.
- Whistleblower protection and incentives or rewards – providing protection for whistleblowers who report on entities evading tax to the Australian Taxation Office, as part of our overall whistleblower protection plan. Individuals who highlight tax evasion collect a share of the penalty collected.
- Mandatory reporting of ‘material tax risk’ (tax haven exposure) to shareholders – requiring companies to disclose to shareholders if the company is doing business in a known or suspected tax haven. A list of these jurisdictions would be maintained by the Australian Taxation Office and would be similar to the design of the European Union’s ‘blacklist’.
- Public reporting of AUSTRAC data – publicly releasing International Funds Transfer Instructions data for every calendar year.
- Disclosure of ‘material tax risk’ for government tenders – amending government procurement process requirements so Australian Government tender process require all companies to state their country of domicile for tax purposes.
- Responsible investment – tasking the Australian Taxation Office with creating or reviewing guidelines for responsible investment for superannuation funds.
- Publicly accessible registry of the beneficial ownership of Australian legal entities – fully implementing the G20 principles Australia signed in 2014 and ensuring transparency over who ultimately owns a company or trust, rather than just accepting who is listed on company paperwork.
- Australian Taxation Office disclosure of settlements and reporting of aggressive tax minimisation – including how many settlements were achieved per financial year and associated data.
- Closing a debt deduction loophole to ensure consistent treatment in related party financing arrangements.
- Automatically denying tax deductions from companies for travel to and from tax havens.
- Clamping down on unsubstantiated allowances for travel in tax havens.
- Crackdown on citizenship shopping – requiring all individual Australian taxpayers to notify and declare to the Australian Taxation Office if they have residency or citizenship of any other jurisdiction and the name of that jurisdiction.
These are just some of the ways we are making multinationals pay their fair share and closing tax loopholes used by the top end of town.
Labor’s plan for making multinationals pay their fair share will save around $1.5 billion over the forward estimates.