Australia joins EU information sharing pilot to combat tax avoidance

Australia and the United Kingdom will push for member nations of the G8 and G20 to look at addressing the ongoing issue of tax avoidance by multinational corporations, as Australia joins a pilot tax information sharing scheme established in Europe.

The two governments yesterday made a joint statement outlining that the issue will be a priority for the UK's G8 presidency this year, with Australia making it a priority of its G20 presidency next year.

Australia said it will join a pilot that commenced in April with the UK, France, Germany, Italy, and Spain to automatically share taxation information in order to keep tabs on taxes paid by multinationals.

The Australian government has been focused on the tax rates that multinationals such as Google and Apple pay in Australia through the so-called "Double Irish Dutch Sandwich" method of funnelling money through other countries from Australia in order to pay a lower rate. It has come amid significant tax revenue declines in Australia, at a time when the government is seeking to pay down its budget deficit.

The federal government has previously called out companies such as Google and Apple for using this method to pay very low taxes in Australia, despite significantly high revenues from advertising and products sold in the country.

It comes as G20 countries were reportedly looking to crack down on companies using these schemes to reduce their tax bills. The countries are specifically looking at forcing companies to declare their income in each country it is generated, which would ultimately lead to much higher tax receipts.

The US is reportedly unhappy about the proposals, however, calling instead for only moderate changes to tax laws, which would ultimately have a significant impact US multinational organisations.