WHY DO THE LIBERALS WANT TO PROTECT TAX HAVENS?
Recent media coverage about a mysterious company in the notorious Cayman Islands has put tax havens back in the headlines.
Globally, around $600 billion of profits are estimated to be shifted to tax havens like the Cayman Islands and Bermuda,representing almost 40 per cent of multinational profits. Bizarrely, Bahamas companies now rank as the fifth-largest foreign owner of Australian farmland.
Tax havens not only undermine the Australian tax system – they are used to hide the proceeds of fraud, corruption and tax evasion. According to one estimate, around four-fifths of money in offshore bank accounts is there in breach of other countries’ tax laws.
At this Federal election, voters are entitled to ask where the major parties stand on tax havens.
Labor has a comprehensive policy suite to expose the use and abuse of tax havens.
Scott Morrison and the Liberals oppose these measures.
Under a Shorten Labor Government, a company based in a tax haven operating in Australia would face a very different reality than it does today.
Labor will set up a publicly accessible registry of the beneficial ownership of Australian companies and legal entities, including trusts. This will allow everyone to find out who really owns our firms, meaning shareholders could no longer use complex structures and sham ownership to bend transparency rules and bamboozle regulators.
Despite committing to a beneficial ownership register in 2016, theLiberals completely dropped the policy.
Labor will require Government tenderers to disclose the country where they’re legally based. Under a Shorten Government, firms tendering for Australian Government contracts worth more than $200,000 would be required to state their country of domicile for tax purposes. No firm headquartered in a tax haven would be able to get a significant government contract without revealing their true status.
Labor will close two tax loopholes that can be exploited by company executives and their consultants. We will deny a tax deduction for flights and travel expenses to blacklisted tax havens. We will also close a loophole that allows wealthy employees to receive allowances of up to $2000 tax-free - $400 per day, up to five days - for trips to tax havens like Bermuda.
Labor will fund Tax Inspectors Without Borders, an OECD/United Nations Development Program joint project that helps developing nations to audit multinationals so that they pay their fair share of tax.
Labor will expose large companies that use tax havens by publicly releasing details from country-by-country reports. The public have a right to know where companies operate, how much revenue they book in tax havens, and how much tax they paid - if any.
Labor will protect and reward whistleblowers. If someone reports on entities evading tax, they will be protected and allowed to collect a share of the penalty.
Additionally, Labor will require mandatory shareholder reporting of tax haven exposure as a material tax risk. We will develop guidelines for tax haven investment by superannuation funds, require public reporting of Australian Transaction Reports and Analysis Centre data, and require the Australian Taxation Office to disclose settlements and report on aggressive tax minimisation.
This is Labor’s plan. The Liberals have nothing – except a record of voting against measures that would affect firms operating in the Caymans and Bermuda.
In 2012 and 2013, the Gillard Government legislated important reforms to “transfer pricing” – closing loopholes that allowed companies to shift profits overseas by inflating costs paid to related parties, including interest on loans. These laws underpinned the Tax Office victory against Chevron, the $529 million settlement with BHP, and most of the revenues raised by the ATO’s Tax Avoidance Taskforce.
The Liberals voted against these laws.
Only Labor can be trusted to clamp down on tax havens and those in the top end of town that use them. It is clear the Liberals only want to protect them.
Authorised by Noah Carroll ALP Canberra.