CANBERRA, Australia — The Australian Labour Party (ALP) has announced it will launch a crack-down on businesses and individuals that avoid taxes by establishing businesses in a tax haven on the Organization for Economic Cooperation and Commercial Development’s (OECD) blacklist.
ALP claims tax havens are threatening Australia’s tax base because they provide anonymous havens that shield them from Australian taxes, which results in citizens having to pay higher taxes and suffer from cuts to vital services.
ALP is a self-described social democratic party that leans left with a tendency toward social welfare and government assistance programs. It claims one of the major problems with the use of tax havens is that under their present scheme, business and individuals with stakes in tax havens are invisible and avoid a huge chunk of taxes.
ALP has set out its own hit-list of countries it considers suspect: Andorra, Liechtenstein, Guernsey, Monaco, Mauritius, Liberia, Seychelles, Brunei, Maldives, Cook Islands, Nauru, Niue, Marshall Islands, Vanuatu, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Grenada, Montserrat, Panama, St Vincent and the Grenadines, St Kitts and Nevis, Turks and Caicos and the US Virgin Islands.
ALP’s goal is to eliminate deliberate tax evasion in which corporations or individuals use overseas tax havens and complex corporate structures to avoid detection and recovery.
According to ALP tax havens are estimated to hold $7.5 trillion of the world’s financial wealth, costing the global economy $200 billion in lost taxes every year. Its proponents emphasize tax minimisation requires greater public oversight. For a long time, civil society and tax fairness campaigners have argued for greater transparency.
ALP has eight proposals in its transparency package: Public reporting of country-by-country reports:
1. Public reporting of country-by-country reports. High-level tax information about where and how much tax was paid by large corporations (over $1 billion in global revenue) will be released publicly.
2. Whistle-blower protection and incentive/rewards – Provide protection for whistle-blowers who report on entities evading tax to the Australian Taxation Office. Individuals who highlight tax evasion collect a share of the penalty collected
3. Mandatory reporting of ‘material tax risk’ (tax haven exposure) to shareholders – Companies would be required to disclose to shareholders as a ‘Material Tax Risk’ if the company is doing business in an international material tax risk jurisdiction (i.e. a known or suspected tax haven). There is no current legal requirement to do so currently.
4. Public reporting of AUSTRAC data – require AUSTRAC to publicly release International Funds Transfer Instructions (IFTI) data for every calendar year (or, if more practical, financial year).
5. Disclosure of ‘material tax risk’ for government tenders – amend Government procurement process requirements such that the Australian Government tender process requires all companies to state their country of domicile for tax purposes
6. Develop guidelines for tax haven investment by superannuation funds – task the ATO (in collaboration with ASIC, and APRA re: self-managed super funds) to create/review guidelines for responsible investment for superannuation funds.
7. Publicly accessible registry of the beneficial ownership of Australian legal entities – re-announcement of election policy. Fully implement the G20 principles Australia signed in 2014 and ensure transparency over how ultimately owns a company, rather than just who is listed on company paper-work.
8. ATO disclosure of settlements and reporting of aggressive tax minimisation – high-level reporting in the ATO’s annual report on how many settlements were achieved per financial year and associated data.
When OECD established its guidelines and “blacklist,” St. Kitts and Nevis responded with the following statement:
The Federation of St. Christopher (St. Kitts and Nevis (hereinafter referred to as the Federation) is pleased to announce that it will participate in the OECD’s Initiative on Harmful Tax Practices. By publishing the attached Anex, the Federation thereby commits to the principles of transparency and effective exchange of information.
With competent regulatory authorities of other jurisdictions and carries out investigations into suspicious activities that may occur in financial institutions within the Federation.
The Federation has also taken measures to ensure more transparency by making amendments to their respective Companies Acts to enable the identification of beneficial owners of bearer shares.
While the Federation strongly supports the OECD’s work on Harmful Tax Practices, it remains committed to protecting its economic interests and fiscal autonomy in any negotiations with the OECD. The Federation wishes to stress that the issue of a level playing field is critical to those interests.