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Greens plan to clamp down on multinational tax avoidance estimated to net $4.5 billion

Media Release
Adam Bandt 13 Nov 2021

Today Greens leader Adam Bandt will address the final Greens National Conference of the year announcing a major pillar of the Greens’ Tax the Billionaires election campaign: the plan to End Multinational Tax Avoidance by clamping down on tax exploits and improving the transparency of company and ATO reporting.

The Parliamentary Budget Office has indicated the policy would claw back around $4.5 billion for the public purse.

The Greens say this policy will work in concert with the previously announced ‘Tycoon Tax’, on corporate super-profits, which itself would prevent certain types of tax minimisation practices. When added to the revenue generated by the already-announced Tycoon Tax (which includes a corporate super-profits tax and a mining super profits tax) and the Billionaires Tax, it brings the revenue raised by Greens’ policies to make big corporations and billionaires pay their fair share of tax to $391b over the decade. The Greens will announce further components applying to oil and gas corporations and ending fossil fuel handouts over coming months.

Recent polls point to a power-sharing Parliament as the most likely outcome of the coming election and in the balance of power, the Greens will push for billionaires and big corporations to pay their fair share of tax to get dental and mental health fully into Medicare and build affordable housing.

 

How the Greens’ multinational tax avoidance crackdown will work

The Greens comprehensive plan to tackle multinational tax avoidance identifies key areas to block the ways that corporations avoid Australian company tax:

  1. Stop the artificial shifting of debt to Australia to increase tax deductions.
  2. Stop tax deductions for royalties paid to other arms of the same company.
  3. Establish a public register of beneficial owners to see who really owns what.
  4. Publish basic information on the tax paid by companies earning over $50 million.
  5. Require the ATO to publish the details of the settlement of tax disputes with companies.

The independent Parliamentary Budget Office has calculated these measures will raise $4.5 billion over the decade. The Greens will also back a global push for a minimum corporate tax rate of 25%.

 

Tax Dodgers - Case Studies

Exxon Mobil

ExxonMobil Australia is a private subsidiary of the publicly listed global parent company. Over the last six years that the ATO has published details on the basic tax affairs of large private companies, ExxonMobil Australia has booked $56B in total income.1 But, each and every year, they reduced their taxable income to $0, mostly through a web of deductible payments to other arms of the same company. Which means that one of the world’s oil and gas giants has been paying 0% company income tax in Australia.

Apple
Apple is the world’s most profitable company. Their gross profit from their Australian operations was $1B in 2020.2 Yet, because they are a private company in Australia, we know little about how their affairs are structured, including what are the $663m in “selling, general and administrative expenses” that enabled them to reduce their taxable income to $410m and their tax bill to $120m. Like many tech giants, Apple Australia could be making royalty payments to the global parent company, which really aren’t an expense and shouldn’t be tax deductible.

PwC
PwC, along with the other Big4 accounting firms, operate as a partnership in Australia, which means we know very little about how much tax they pay. PwC says that its partners pay an average of 37% tax on $2.6B in revenue.3 But there is scant detail on how they arrived at these figures, which is ironic for an accounting firm.4 Whatever tax the partners do or don’t pay pales in comparison to their work as architects of intricate and sophisticated tax schemes for multinationals.5 In Australia, PwC has used lawyers to shield from the public what advice they have given to serial tax avoiders such as coal miner Glencore and Brazilian meat processor JBS, and what effect this advice had on how much tax these companies pay.6

 

Greens Leader Adam Bandt MP in the speech will say:

Liberal and Labor aren’t just making the climate crisis worse, they’re making inequality worse too.

Right now, 1 in 3 big corporations don’t pay any tax.

The Greens believe that big corporations making big profits should pay tax.

In balance of power, the Greens will push to make big corporations and billionaires pay their fair share of tax.

There will be a billionaires’ tax on billionaires’ obscene wealth, which grew faster during the pandemic than the wealth of billionaires in any other country.

We will push for a ‘tycoons tax’ on the super-profits made by big corporations.

We will axe the handouts to the coal and gas corporations, because corporations who are mining and burning coal and gas need to be phased out, not publicly funded to make the climate crisis worse.

And today, I would like to announce the next part of our plan to make the big corporations and billionaires pay their fair share of tax and stop sending all their profits offshore.

The Greens will crack down on multinational tax avoidance.

Big corporations have too much power.

They seem to write their own rules.

Nowhere is this more evident than in tax.

Right now, we’re all being ripped off by multinational corporations who hide their profits in tax havens, shell companies and use accounting tricks to get away with paying their fair share of tax.

One example is ExxonMobil Australia. Over the last six years, it’s booked $56B in total income.7 But, each and every year, they reduced their taxable income to $0, mostly through a web of deductible
payments to other arms of the same company.

One of the world’s oil and gas giants has been paying 0% company income tax in Australia. What a joke.

These schemes are widely used to avoid or reduce tax in Australia.

Apple does it. Santos does it. And Virgin does it.

It’s a rort. It’s dodgy. But it’s lawful.

We must close the loopholes and stop the cash train departing our country.

The tax law might be complicated, but the morality is pretty simple.

When a nurse is paying more tax than a multinational, something is deeply wrong.

Multinationals making huge profits and sending them offshore should pay tax.

The Greens will push to end the rorts.

In balance of power, we will push to close the loopholes that allow money shifting offshore, by forcing companies to pay based on their global debt to equity ratio.

We will push to increase transparency, by forcing companies to publish what they pay, and ban secret settlements with the ATO.

And we will improve monitoring and enforcement, by establishing a public register of beneficial owners.

Our policy would claw back around $4.5 billion, according to the PBO. We’re being robbed and we need to get this cash back.

And we will back the minimum 25% global tax rate for multinational companies.

They will fight us, in court and in public, but people are fed up with being forced to pay more for schools and healthcare while billionaire corporations pay no tax.

People would prefer to have free mental and dental health care rather than billionaire corporations sending massive profits to offshore shareholders.

But to make the big corporations and billionaires pay tax, we need to get into the balance of power.

 

Quotes attributable to Greens Treasury Spokesperson Senator Nick McKim:

“Tax avoidance is a game to these big corporations, and ultimately the loser is the Australian public.

“Ultimately, everybody knows what’s going on; the profits are being made here and we’re sitting back and watching them fly away. We need to stop the rot and make these multinationals' pay their fair share of tax.

“We’re sick of hearing that it’s ‘too hard’ to tax corporations making billions of dollars here in Australia. All of the tired excuses and threats of leaving the country are paper thin.

“What company turns its nose up at billions in profit because it has to pay a fraction of that profit in tax? Sure they’ll take it all if we let them, but the other option is to play hard ball and call their bluff.

“Every dollar of tax that the government fails to get from a multinational is an extra dollar they have to either take from an Australian worker or cut from schools and hospitals.

 

Footnotes:

  1. ATO, Corporate tax transparency: report of entity tax information, 2013-19.
  2. ASIC, Copy of financial statements and reports, Doc No. 7EBE03904 - Apple Pty Ltd, ACN: 002 510 054
  3. https://www.pwc.com.au/press-room/2019/pwc-australia-discloses-its-tax-contribution-to-the-australian-economy.html; https://www.pwc.com.au/press-room/2021/pwc-australia-delivers-full-year-revenue.html; and assuming
  4. Literally, there are two press releases. One contains some numbers in the text. The other has a five line table. That’s it! And they only issued these press releases following attention through a parliamentary inquiry. They don’t even have to disclose this information.
  5. See: Jones, Temouri & Cobham, Tax haven networks and the role of the Big 4 accountancy firms, Journal of World Business, Volume 53, Issue 2, February 2018, Pages 177-193.
  6. Commissioner of Taxation v Glencore Investment Pty Ltd [2020] FCAFC 187; Commissioner of Taxation v
    PricewaterhouseCoopers & Ors.
  7. ATO, Corporate tax transparency: report of entity tax information, 2013-19.
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