Oxfam Australia Says Companies Making Use Of Tax Havens To Avoid Paying Tax

Tax Avoidance

The latest report from Oxfam Australia has revealed that Australian based multinationals through 15 different tax havens cost Australia $4.8 billion during 2014. The three main offshore financial centres used by companies operating in Australia include Switzerland, Singapore and the Netherlands. The top of the tax haven list however, is Bermuda because it offers 0 per cent income and withholding tax as well as a distinct lack of transparency.

Lots of different places to park cash

Other offshore tax havens named in the top 15 include the Bahamas, Hong Kong, Luxembourg, Ireland and the Cayman Islands. Oxfam’s report argues that there is a rapidly growing race to the bottom on corporate tax rates with governments globally looking to slash or drop tax rates. Oxfam highlighted the fact that 25 years ago, the average tax rate across G20 countries was 40 per cent compared to less than 30 per cent today.

“There is no winner in the race to the bottom on corporate tax. 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.” said Muheed Jamaldeen, senior economist at Oxfam Australia in the report.

Profits have risen but tax revenues have not

Despite the fact that over the last 30 years, net profits by the world’s biggest companies have tripled in real terms from just $2 trillion in 1980 to a whopping $7.2 trillion in 2013, the report claims that corporate tax contributions are actually diminishing. Oxfam claims that 90 per cent of the world’s largest companies hold a presence in at least one tax haven.

“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.” said Mr Jamaldeen.

Taxation addresses income inequality

The issue of taxation is important one. Oxfam puts this into context by claiming that the richest 62 people have the same wealth as the bottom 3.6 billion. That amount is more than enough to pay for the education of all 124 million children that are currently not in school as well as pay for the health care costs of 6 million children. Last year Oxfam released a report which suggests that the Australian economy faced losses of as much as $6 billion in corporate tax revenue every year as a result of the use of tax havens.

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