OECD pressures Australia to shelve plans to disclose where companies pay tax

Get free OECD updates

we will send you one myFT Daily Digest Latest Email Rounding oecd News every morning.

The OECD helped persuade Australia to weaken a law that requires thousands of multinational companies to publicly disclose where they pay taxes.

Two people familiar with the discussions told the Financial Times that the OECD pressured Australia’s ruling Labor government to drop a key part of the new finance bill, requiring some multinationals to publicly disclose their country-by-country tax bills. to be disclosed.

The Paris-based organisation, which has spearheaded efforts to force the world’s biggest companies to pay their fair share of taxes, believes the bill does little to make the affairs of multinationals less opaque. would have undermined his own efforts.

However, the Australian bill would have exposed unprecedented details about companies’ tax affairs in each country – campaigners say the move could help rein in tax evasion by forcing companies to reveal how much of their Revenue is recorded in a low-tax jurisdiction. ,

Around 2,500 multinational companies with Australian activities and annual revenues of more than A$1bn will be affected, including tech giant meta, oil company bp and AIA, the insurer.

The bill was expected to pass the Australian Parliament in June and come into force on 1 July. However, the version of the bill passed last month removed key disclosures, with the Australian government delaying the planned public country-by-country announcement. Tax reporting regime for one year.

People familiar with the decision said officials at the intergovernmental body had insisted to the Australian Treasury that countries that signed the 2015 OECD agreement did so on the basis that tax reports would not be public.

“There was strong opposition to the bill from the OECD and this was one of the key factors behind the decision to back out of the move,” said a person with knowledge of the situation.

While large multinationals already report some country-by-country data to tax authorities under an international agreement brokered by the OECD in 2015, the Australian proposal would have revealed additional new data points. More importantly, OECD country tax reports are not shared with the public.

Alex Cobham, chief executive of The Tax Justice Network, a pressure group, said: “It is truly shocking to confirm that the OECD lobbied its own member country against introducing a key measure to fight corporate tax abuse. “

Jason Ward, principal analyst at the Center for International Corporate Accountability and Research, another pressure group, said he was deeply concerned by the development. “(Except for the multinationals) who hide their affairs, it is a tragedy for everyone involved.”

Over the past decade, the OECD has led global efforts to close loopholes and restrict the use of tax havens, following a call by the G20 in 2013 to address the growing problem of corporate tax avoidance.

The OECD said: “As a forum for co-operation on international rules and standards, the OECD generally shares its knowledge and experience relating to the understanding and interpretation of rules and standards that may be negotiated and agreed upon by sovereign jurisdictions.” Is.”

It added that this included “advising governments of the potential differences that exist between their proposals and those of stronger international standards”.

The organization said those standards had been agreed upon by more than 140 countries and jurisdictions through a joint project between the OECD and the Group of 20.

“Ultimately, domestic policy decisions remain within these sovereign jurisdictions to propose and agree as they see fit,” the OECD said.

A man at the Australian Treasury said that the OECD intervention was not the only reason for the government’s downfall. The person pointed to fierce criticism from domestic and international businesses, who warned its proposal would expose sensitive commercial data and put companies doing business in Australia at a competitive disadvantage.

People told the FT that Japan and Japanese business groups were at the forefront of challenging the measure. The Japanese ministry declined to comment.

Keidanren, Japan’s biggest business lobby group, said it last month expressed concerns to the Australian embassy that the new bill would undermine the OECD’s 2015 agreement. Sharing the information publicly would be problematic in terms of protecting confidential and sensitive corporate information, said a Keidanren official.

public entries The proposed measures drew strong calls from business groups including Swissholdings – which represents the interests of 62 Swiss-based multinationals such as Nestle, Roche – and the Australian Financial Markets Association, whose 130 members include several banks such as Deutsche Bank, Bank Lobbying has also been detected. China, Bank of America, Citigroup and BNP Paribas.

The bill was also opposed by the Big Four accountancy firms, including PwC Australia, which has been embroiled in a scandal that revealed some of its partners, who advised the government on anti-tax legislation, had been using illegal means to attract business. had shared confidential information about those plans for

Ward said that “it’s not a good thing for a Labor government to be taking indirect orders from a Liberal finance minister” – referring to Mathias Cormann, who heads the OECD and was previously Australian finance minister for the Liberal Party. Were. ,

The Australian government told the FT it is “committed to improving corporate tax transparency”.

“The public country-by-country reform has attracted the interest of a wide range of stakeholders and the government is taking some additional time to consider this response,” the government said.

Additional reporting by Kana Inagaki in Tokyo