The Australian government has brought forward legislation1 which would deliver a step change in the tax transparency of major multinationals – with global ramifications.
Australia’s proposed legislation, which is expected to pass with a comfortable majority, would require major multinationals operating in Australia to publish country by country reporting data. This is data showing the scale multinationals’ activities, including profits declared and tax paid, in each jurisdiction where they operate. Making this data transparent allows public scrutiny of profit shifting, and has been shown to raise the effective tax rates paid, even without additional policy changes.2
The Australian measures would come into force for financial years beginning July 2023 or after, around the same time that related EU measures also come into force. The EU measures require only partial publication of data under the heavily criticised OECD standard, however. The Australian draft legislation requires comprehensive publication and aligns with the Global Reporting Initiative (GRI) standard. It would have global impact because the legislation would require all multinational groups with operations in Australia to publish the data on their full international activities.
The Australian legislation is a sharp rebuff to the OECD. Since 2020, investors, academics and civil society groups have called on the OECD to align its standard with the much more technically robust GRI standard.3 Three years after the OECD’s public consultation on the subject, however, the organisation is yet to respond. In that consultation and repeatedly since, investors with trillions of dollars in assets under management have called for the OECD to require publication of the data. But the OECD insists that the data remain secret for tax authorities only to access.
The explanatory documents for the Australian legislation show how they have been forced to sidestep the OECD restrictions: “The [OECD country by country] report is subject to strict confidentiality and cannot be publicly disclosed under Australia’s international obligations in the OECD/G20 Base Erosion and Profit Shifting Project report on Action 13. Therefore, these amendments create a separate public reporting obligation.”
The Tax Justice Network wrote to the G20 group last year to highlight how the OECD is failing in its responsibilities with the important global public good that country by country reporting represents.4 This legislation confirms the growing frustration with the OECD of even core members like Australia. It also opens the door for all other countries to require publication of this data. Even on its own, however, the Australian legislation will make key data available to many countries around the world, to the benefit of tax authorities, investors, researchers and civil society alike.
Pivotal to achieving this commitment has been the work over a number of years of Tax Justice Network-Australia and of CICTAR (the Centre for International Corporate Tax Accountability and Research) and PSI (Public Services International), building key alliances with investors and the labour movement to demonstrate the breadth of demand for tax transparency.5
Alex Cobham, chief executive at the Tax Justice Network, said:
“This legislation represents a major step forward in the fight against tax abuse by multinational companies. The Tax Justice Network commends the Australian government on its willingness to bypass the OECD’s opposition to tax transparency. If this legislation goes through it stands to benefit countries and people all around the world, because this transparency is already proven to reduce the scale of corporate tax abuse.”
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Notes to editor
- Read the draft legislation here.
- The Tax Justice Network estimates that at least 1 of every 4 tax dollars lost by the world to multinational corporations using tax havens can be prevented by requiring multinational corporations to publish country by country reporting data.
- Read more about investors demanding the OECD to align its standard with the GRI standard here. Read more about shareholder efforts to commit Amazon to country by country reporting here.
- Read the Tax Justice Network’s open letter to the G20 in the annex of the State of Tax Justice 2022 here.
- Read CICTAR’s statement on the legislation here. Read PSI’s statement here.