Estimated reading time 2 minutes 2 Min

Minister says nations lose as much as $US600 billion a year to tax havens

Australia’s Assistant Minister for Competition has told a global forum that governments need to maintain pressure on multinationals that avoid tax by using tax havens that charge little or no corporate tax.

September 29, 2022
By Poppy Johnston
29 September 2022

Governments should not stop imposing taxes on big corporations, an Australian government minister said on Wednesday, despite the challenges of collecting tax from multinationals skilled at exploiting loopholes. 

Australia’s Assistant Minister for Competition Andrew Leigh says nations should remain focused on multinational tax avoidance despite some calls to abolish corporate tax entirely.

Leigh told an Organisation for Economic Co-operation and Development forum that Australia leans more heavily on corporate tax than many other developed nations and it was essential multinationals paid their share. 

“Since company taxes comprise 19 per cent of Australia’s revenue base, to accept the accounting tricks and dodgy behaviour that multinational firms engage in would have a massive impact on Australia,” said Leigh.

He noted that nations were losing as much as $US600 billion a year to tax havens, which are jurisdictions that charge little or no corporate tax.

Leigh challenged the notion floated by some US-based academics that corporate tax should be scrapped entirely because avoidance tactics had become so widespread.

“It threatens to disturb the economic equilibrium of our society when our wealthiest companies refuse to pay their share.”

Assistant Minister for Competition Andrew Leigh

Ahead of the recent election, Labor backed the OECD’s plan to install a 15 per cent minimum tax on multinational companies and a handful of other measures to tackle multinational tax avoidance.

The measures are expected to raise $1.89 billion over the next four years.

Australia’s Treasurer has called for a “national conversation” about how the government’s finances are managed but says multinational tax avoidance is the only tax reform on the agenda at present.

More in Business