20/08/2024 

Ms PAYNE (Canberra) (17:02): Integrity is at the heart of everything that this Labor government seeks to achieve, and the Assistant Minister for Competition, Charities and Treasury, Dr Andrew Leigh, has been a champion for integrity throughout our tax system since he was appointed. Now we're taking on the next challenge: multinational companies not paying their fair share of tax. We are acting on a commitment that Labor took to the 2022 election. This included supporting the OECD G20 two-pillar solution, a multilateral solution representing the most significant reform to the international corporate tax system in a century. Reforming the international tax system is no easy feat, but we join with our global community to ensure that global firms are paying their fair share of tax and not exploiting unintentional loopholes across jurisdictions.

Australia has long been a champion of the global 15 per cent minimum tax, and we are now in the first group of nations to implement the global minimum tax and domestic minimum tax of 15 per cent. From this year, this tax will apply to multinational enterprises with an annual global revenue of at least 750 million euros, which is approximately A300 billion. In many cases, this revenue is being channelled away from the tax systems of developing nations, consolidating a global divide between sophisticated financial centres and resource-rich, less-developed parts of the world. Australia joins the United Kingdom, Canada, Japan, South Korea, the European Union and other jurisdictions in implementing the global minimum tax from 2024.

Our government will help ensure large multinationals pay their fair share of tax. This is the most recent in a suite of multinational tax measures delivered by the Albanese Labor government. Our government has already delivered four significant multinational tax reforms. First, our new subsidiary disclosure law will require public companies listed and unlisted to disclose information on the number of their subsidiaries in the country of tax residency. This will make the way companies structure their subsidiaries, including for tax purposes, transparent to both the government and the public.

Second, companies with tenders and government procurement processes valued above 200 million a year. In this year's budget we have extended the operation of this taskforce to 2028, allowing the ATO to crack down on tax-dodging by multinational enterprises, large public and private groups and Australia's wealthiest individuals.

Finally, we've also tightened Australia's thin capitalisation rules to stop a common approach taken by multinationals to minimise their tax. Our new approach reduces the ability of taxpayers to create artificial interest-bearing debt in Australia as a way of maximising interest-related deductions and in turn reducing their overall tax bill.

Our government is also delivering five further multinational tax reforms. First, the government's bill to create a public country-by-country reporting register has been introduced to parliament, and, once it is passed, reporting requirements will apply from 1 July this year. Creating a public country-by-country reporting register will deliver a key part of the government's multinational tax integrity election commitment. It will see Australia put in place a world-leading set of disclosure laws.

Second, the government is progressing its election commitment to implement a public register of beneficial ownership, which will show who ultimately owns, controls or receives profits from a company or legal vehicle operating in Australia.

Third, we've also added to our election agenda by strengthening the way our foreign investment system reduces the risk of multinational investors avoiding tax. On 1 May this year, the Treasurer announced changes to deliver a stronger, more streamlined and more transparent approach to foreign investment. Foreign investment has a key role to play in our economy, but only when it's in the national interest. We are making sure that foreign investors pay their fair share of tax in Australia. This includes releasing updated guidance about the kinds of tax arrangements that will attract greater scrutiny, such as those that are overly complex.

Fourth, to further protect our tax system from foreign investments where investors currently have incentives to circumvent intended outcomes in our tax settings, we're strengthening the foreign resident capital gains tax regime. As part of this year's budget, the government announced it will strengthen the regime in line with the OECD standards to ensure foreign residents pay their fair share of tax in Australia.

Fifth, in this year's budget, we also announced a new royalty penalty. From 1 July 2026, the penalty will apply to significant global entities with annual revenue of over 600 billion, are shifted to low-tax countries each year. This global profit-shifting industry causes significant damage to the revenue base of countries such as Australia. Wier and Zucman calculate that, in 2019, around 10 per cent of corporate tax income was lost as a result of global profit-shifting. They estimate that, back in 1975, this figure was less than 0.1 per cent. A race to the bottom between nation-states has seen average corporate tax rates fall from 49 per cent in 1985 to 24 per cent in 2019.

Australia relies more heavily on company tax relative to other OECD countries, even though Australia's aggregate tax burden across all levels of government is lower than the OECD average. Since company taxes comprise 19 per cent of Australia's revenue base, the accounting tricks and dodgy behaviour of multinational firms have a massive impact on Australia.

A division having been called in the House of Representatives -

Sitting suspended from 17:15 to 17:28