More than $4 billion in Australian tax is being shifted by Australian-based multinationals into the world’s 15 worst corporate tax havens each year, depriving public coffers of revenue that could be spent on schools, hospitals and tackling poverty, new Oxfam research has revealed.
Oxfam has named the worst tax havens for encouraging multinational corporate tax avoidance in its report, Tax Battles: the dangerous race to the bottom on corporate tax, published today.
The report exposes 15 jurisdictions as the worst tax havens used globally by multinationals to avoid paying tax in the countries where they operate.. They are: (1) Bermuda (2) the Cayman Islands (3) the Netherlands (4) Switzerland (5) Singapore (6) Ireland (7) Luxembourg (8) Curaçao (9) Hong Kong (10) Cyprus (11) Bahamas (12) Jersey (13) Barbados, (14) Mauritius and (15) the British Virgin Islands.
Oxfam’s researchers compiled the ‘world’s worst’ list by assessing the extent to which these countries use damaging tax policies to help corporates reduce their tax bills, including using low or zero company tax rates, unfair and unproductive tax incentives, and showing a lack of cooperation with processes fighting tax avoidance.
An Oxfam Australia analysis estimates tax-dodging by Australian-based multinationals through the 15 worst corporate tax havens cost Australia between $4 and $4.8 billion in 2014 — accounting for about 90 per cent of Australia’s lost corporate tax. Switzerland, Singapore, and The Netherlands are revealed to be the top three offshore financial centres used by tax-dodging multinationals operating in Australia.
The Tax Battles report also highlights that tax havens are only part of the problem, with a growing race to the bottom on corporate tax rates seeing countries around the world — including Australia — slashing or planning to slash slashing corporate tax rates. The average corporate tax rate across G20 countries was 40 per cent 25 years ago — today it is less than 30 per cent. The use of unproductive and wasteful tax incentives is also ballooning, particularly in the developing world.
Muheed Jamaldeen, Oxfam Australia’s Senior Economist, said Australian-based companies needed to be crystal clear about what taxes they were paying and where.
“There is no winner in the race to the bottom on corporate tax,” Mr Jamaldeen said. “Creating a public list of the world’s worst tax havens is a step towards creating disincentives for multinationals to use them. It is also about transferring the burden of proof back onto companies to prove that operations in these jurisdictions are genuine.
“The Australian Government has taken steps in the right direction, but data released on Friday which showed more than one in three large companies are paying no tax is evidence that we need to do a lot more. The Australian Government has a responsibility to join efforts to stop this race to the bottom on corporate tax rates, and demand that companies pay their fair share – at home and abroad.
“Oxfam is renewing calls for tax transparency legislation that requires multinationals in Australia with income greater than $250 million to publically report incomes, employees, profits earned and taxes paid for every country in which they operate.
“With growing inequality around the world making the fight against poverty even harder, companies must pay their fair share of taxes, so that the revenue can be used to improve people’s lives, both here and for the world’s poorest people.”
The findings follow Oxfam Australia’s June 2016 report, The Hidden Billions, which estimated that nearly $9 billion in corporate tax was being hidden by Australian-based multinationals across all tax havens. Of this total, the Australian economy loses out on $5 to $6 billion in corporate tax revenue annually, while developing countries are deprived of nearly $3 billion in much needed funds that could go towards essential services.
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