Paradise Papers scandal reignites calls for tax reform

Paradise Papers scandal reignites calls for tax reform

Business taxes are once again in the spotlight as the Paradise Papers scandal uncovers further evidence of tax evasion by wealthy individuals and large corporations.

The International Consortium of Investigative Journalists (ICIJ) recently began publishing a huge tranche of documents related to tax haven activity by some of the world’s wealthiest companies and individuals, with far-reaching implications for those named and shamed as part of the disclosure.

Part of the problem could be Australia’s comparatively high company tax rate, which may act as incentive to push profits through offshore tax havens.

While not directly addressing the Paradise Papers, Business Council of Australia chief executive Jennifer Westacott claimed that Australia “is at risk of becoming an isolated high tax island while other nations in our region and beyond reap the benefits a competitive tax rate which encourages investment and growth”.

“The average company tax rate across the OECD [Organisation for Economic Co-operation and Development] is 24 per cent and falling. The average across Asia is 21 per cent,” Ms Westacott said.

“Last week, the United States confirmed its plans to slash its federal company tax rate from 35 per cent to just 20 per cent, while France plans to move its company tax rate from 33 per cent to 25 per cent.

“Australia’s 30 per cent rate crushes opportunity by discouraging international businesses from investing in Australia and Australian jobs.”

Oxfam Australia chief executive Dr Helen Szoke said tax dodging is a damaging practice for the national and global economy, diverting revenues away from public services.

“Australian-based multinationals are part of the problem, contributing to keeping the world’s poorest out of pocket as governments balance the budget by raising taxes on people and cutting vital public services,” she said.

Yet SMEs are also indirectly the victims of such crimes, paying higher rates of tax than larger counterparts and then being denied additional government support due to budgetary constraints.

Dr Szoke called on the federal government to introduce a number of transparency measures in a bid to curtailing the practice, including “establishing a centralised public register of the individuals who own and benefit from shell companies, trusts and foundations”.

Mark Konza, deputy commissioner international at the Australian Tax Office (ATO), said he is confident of his agency’s abilities to chase diverted profits and unpaid taxes.

“The data we are receiving from our international and domestic sources is comprehensive and current. This robust intelligence, coupled with our powerful analytics capabilities, assists us to continue to tackle tax avoidance head-on,” he said.

“We anticipate further data may be published by the ICIJ and the ATO will continue to work closely with other tax administrations to share intelligence on advisers operating globally.”

 

Paradise Papers scandal reignites calls for tax reform
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