Australian Greens unveils AU$1.7b multinational tax avoidance policy

The Greens party has set out a policy framework that proposes changes to tax law, public disclosure, enforcement, and global diplomacy.

The Australian Greens party has released an 18-point policy plan aimed to stamp out tax avoidance by multinationals operating in Australia, claiming it will raise at least AU$1.69 billion in additional revenue.

The policy [PDF] has been created to tackle four key problem areas: Enforcement, tax law, public disclosure, and global diplomacy.

Under enforcement, the Greens has suggested to reverse the Australia Taxation Office's staffing cuts in order to ensure there is a sufficient staff level to assure multinationals are paying what they owe, as well as establish a high-level tax recovery unit made up of the top 20 tax accountants and legal specialists working in the private sector.

In addition, the Greens wants to see the Australian Securities and Investment Commission's (ASIC) power increased to allow the organisation the ability to share information with the ATO, without having to notify the affected person; and for people who propose to become directors of companies be required to provide evidence of their identity to ASIC.

The Greens also wants to offer whistle-blowers greater protection and support, saying it would more likely encourage those who want to expose misconduct to come forward. The move would be an extension of previous laws that were passed by Labor that provides legal protection for public servants and contractors that expose wrongdoing in the public service sector.

Some of the tax law changes the Greens wants to see as part of its policy plan include penalising people or companies that are based out of jurisdictions that are not exchanging tax information with the ATO, by taxing them at a higher rate and not allowing them to claim deductions or tax credits on activities in Australia; taxing individuals 30 percent for the financial gains made by their trusts; assessing multinationals' tax deductions on the debt to equity ratio of their global operations; and considering a company's tax arrangements as part of a government tender process.

In order to improve public disclosure around the way multinationals are taxed in Australia, the Greens believes the ATO should be empowered to charge penalties against companies and individuals that do not lodge information on who owns or has control of trusts and private companies registered in Australia by 1 July 2017, before that database of information is shared with the Australian Information Commissioner that can make it available to journalists, academics, the public service, and other interested parties.

Similarly, the party believes the ATO's disclosure regime, which currently publishes the total income and taxes paid of the wealthiest companies, should be expanded to publish the names and financial figures of the top 20 companies that transfer money offshore through inter-related transactions in each financial year.

It also believes that by setting up a public register naming each company and the settlement they have made with the ATO, listing the amounts the ATO originally assessed of a company's liability, and the amount the matter was finally settled for, would dissuade companies under-claiming their tax liabilities.

Other changes the Greens party believes could improve public disclosure include lowering tax disclosure thresholds for both private and publicly listed companies, so that companies that make AU$50 million of income in a year will disclose their tax activities; establishing a public register specifically for the Australian mining and infrastructure companies, whereby they disclose the value and purpose of funds paid to foreign governments; ending the exemptions on disclosure for "grandfathered" companies; and tightening accounting reporting standards.

The final points of the policy see the Greens push for improved global diplomacy, in particular around stopping the government's Future Fund investing in companies based in tax havens and seeing Australia work with other countries towards unitary pricing.

The Greens added that it will invest AU$400 million to help Australia become an "activist middle-power" and pursue agreements to reduce tax avoidance similar to how the country pursues trade agreements.

Greens spokesperson for Finance, Senator Peter Whish-Wilson, said the policy is a push to help Australia rewrite the rule book around how multinationals can operate in Australia.

"Whether you are Google or Chevron or Glencore, the time for paying your fair share starts now. When businesses don't pay their fair share of tax then governments can't provide the services we all rely upon.

"The Greens tax avoidance package is a blueprint that includes 18 measures across the areas of compliance, tax law, disclosure, and diplomacy.

"We need to restore funding to the Australian Tax Office so we can properly scrutinise the claims companies make about their tax affairs. We need to provide the powers that the regulators like ASIC are demanding so that they can simply do their job properly.

"When a company does business from a jurisdiction that doesn't share basic tax data with Australia we should have the ability to impose financial costs on that company for doing so. The era for secrecy in corporate tax affairs is over," he said.

At the end of last year, the Greens voted with the Coalition to pass legislation that resulted in multinational companies with annual revenue above AU$1 billion report income, tax, and transfer pricing arrangements to the Australian Taxation Office (ATO), and the penalties for tax evasion increased.

The new legislation, which came into effect at the start of the year, means multinationals need to provide the commissioner of taxation with information of transactions between each Australian-based subsidiary and its associated overseas enterprises, along with the amount transferred and the business' reasoning for its transfer pricing determinations.

The implementation of the new laws by the Australian government was part of recommendations that were made by the Organisation for Economic Cooperation and Development (OECD) from its G20-commissioned base erosion and profit-shifting (BEPS) project. Under BEPS, the OECD expects to be able to retrieve as much as $240 billion in lost revenue each year through dodgy tax practices across the globe, which it claims represents up to 10 percent of global corporate income tax revenues.

The Australian government has been working on cracking down on multinational companies operating in Australia that are avoiding paying tax.

Last August, it was revealed that AU$31 billion was funnelled from Australia to Singapore in a year by 10 multinational companies.

Prior that, Apple, Google, and Microsoft admitted they were being audited by the ATO for tax avoidance, with Apple and Google having previously being called out by the federal government for employing the so-called Double Irish Dutch Sandwich method.

The Australian Greens is the third party in Australian politics, and often holds the balance of power in the upper house. It is expected that Australia will head to the polls on July 2.