Australian Senate report advocates heightened public disclosure of multinationals’ tax affairs

An interim report prepared by the Australian Senate Economic References Committee, released August 18, calls for laws mandating greater public disclosure of the tax information of large multinationals.

The report, titled “You cannot tax what you cannot see,” makes 17 recommendations, focusing on public disclosure, transparency, and financial reporting of multinational groups operating in Australia.

Included is the recommendation that “any Australian corporation or subsidiary of a multinational corporation with an annual turnover above an agreed figure . . . be required to publicly report financial information on revenue, expenses, tax paid, and tax benefits/deductions from specific government incentives, such as fuel rebates and research and development offsets.”

The report also recommends that the government establish a public register of tax avoidance settlements reached with the Australian Taxation Office where the value of the settlement is over an agreed threshold.

Further, the report suggests that the government consider publishing excerpts from country-by-country reports concerning multinationals. The Australian government, on July 6, introduced legislation that implements the country-by-country reporting standards developed under the OECD/G20 base erosion and profit shifting plan.

According to the report, a new law which requires the Australian Taxation Office to annually publicly disclose the income and tax paid by large taxpayers beginning late 2015, is “a good first step,” but only requires disclosure of “relatively basic” information. The Senate committee strongly opposes a Treasury proposal to exempt private companies from the new reporting regime.

The report includes a dissenting report, further commentary from the Australian Greens, and an appendix titled, “A consistent and useful effective tax rate methodology to assess the global tax performance of multinationals in relation to Australian-linked business operations.”

The Senate committee has been investigating multinational corporation tax avoidance since October 2, 2014, holding hearings where executives of Google, Microsoft, Rio Tinto, Roche, BHP Billiton, and Novartis were grilled about their companies’ tax practices.

Recommendations for tax law changes to address base erosion and profit shifting will be dealt with in the final report of the Senate committee, due November 30.

See:

• You cannot tax what you cannot see