Australia Plans To Make Corporations Reveal Which Foreign Nations They Pay Taxes In

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A potential new law intending to limit multinational companies from transferring their profits to tax havens is recommended as an example for the U.S. and EU to follow.

If this new law passes, it could mean that substantial multinational corporations headquartered outside of Australia would still have to report their annual income and taxes paid in every country where they operate to the Australian Tax Office.

This new requirement could have a significant impact on American businesses that operate in Australia. The new regulation seeks to end organisations that route their gains to overseas tax havens so they can sidestep paying taxes in the countries where they do business.

Corporate profit shifting, also known as tax avoidance, costs countries $500 billion to $650 billion in lost revenue yearly, according to a United Nations report published last year.

The advancement of the proposal has been widely celebrated by transparency advocates, as the increased information will empower investors and lawmakers and allow authorities to crack down on tax dodgers more easily. Proponents have called for similar or stronger requirements to be put in place by both the United States and European Union.

Australia has taken an important first step to arm investors, policymakers, and other users of financial statements with the information necessary to invest smartly and govern better.”

“It’s a tag – you’re it, for the United States, now,” said Ian Gary, executive director of the Financial Accountability and Corporate Transparency Coalition.

Exposés, such as the Paradise Papers and Lux Leaks from the ICIJ, have shed light on how far companies will go to shift their profits to tax havens so they don’t have to pay taxes where they do business.

The 2017 Paradise Papers showed how over 100 prominent corporations, including household names like Nike and Apple, use aggressive tax avoidance tactics to move profits worldwide and amass $252 billion in overseas accounts.

A study done last year discovered that, in a single year, companies moved $1 trillion offshore, which then stopped governments from collecting hundreds of billions in taxes.

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