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Corporate tax avoidance costs trillions a year. But Australia's plan to end it could create new problems (www.abc.net.au)

submitted 1 year ago by [email protected] to c/[email protected]

3 comments fedilink hide all child comments

Next year, Australia will introduce a global minimum tax aimed at preventing multinationals based within its borders from evading tax.

It's been dubbed the "race to the bottom".

However, Singapore's effective tax rate can be much lower, as its government has incentives that greatly reduce or remove tax obligations for multinationals that set up operations and services in that country.

Last year, the ATO reached a settlement of almost $1 billion with mining giant Rio Tinto over its Singapore-based subsidiary.

Professor Sadiq says the tax will "raise very little" for Australia, providing $210 million by the 2024 financial year, "less than half a per cent of the $93 billion in company tax revenue" expected for that year.

Professor Sadiq says it would be better to distribute corporate tax revenue to countries with a company's activities actually take place.

(I welcome any recommendations for a better summary website to use.)

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[–] [email protected] 19 points 1 year ago

Make the rich pay their share. Figure out the new problems as they arise.

[–] [email protected] 8 points 1 year ago (1 children)

This is the best summary I could come up with:

Australia was one of the 130 OECD countries and jurisdictions that pledged in 2021 to introduce a 15 per cent global minimum tax, which it intends to implement from January 2024.

The idea of a global minimum tax has been promoted by renowned economist Joseph Stiglitz as well as political leaders in Australia and abroad.

"What we don't want to see is an economy where multinational companies are looking for a shortcut to success by finding another tax loophole," Andrew Leigh, the assistant minister for competition, charities and treasury, wrote in the Australian Financial Review last year.

In 2016, reportedly half of US corporate profits were stashed in seven countries with low tax rates: Bermuda, the Cayman Islands, Ireland, Luxembourg, the Netherlands, Singapore and Switzerland.

In 2021, the International Monetary Fund reported that multinationals mining in Africa could be shifting potentially more than $1 billion worth of corporate tax revenue out of the continent every year.

I'm a bot and I'm open source!

[–] [email protected] 1 points 1 year ago

Good bot