20 September 2014
Media Release - #2014052, 2014

Global leaders to tackle profit shifting and tax evasion

G20 Finance Ministers have agreed to tackle base erosion and profit shifting (BEPS) to make sure companies pay their fair share of tax.

We have also agreed to increase transparency and crack down on tax evasion.

In 2013, we unanimously agreed to a 15 point BEPS Action Plan. This will help secure our revenue bases by limiting the opportunities for double non-taxation and ensuring a globally coordinated approach to international tax challenges.

We are half way through an ambitious two year work program to update international tax rules for the 21st century. This weekend the OECD will deliver to Ministers and Governors the first tranche of work under the BEPS agenda.

This work will help ensure that tax is paid where profits are made. This has never been straight forward and, in a digital economy, this is increasingly difficult.

But in Australia we are already taking steps to ensure that profits earned here are taxed here.

The Australian Taxation Office already has strong investigative powers to ensure that multinational companies operating in Australia are paying their fair share of tax.

The ATO is undertaking more extensive enquiries and audits of multinational companies considered a risk to Australian tax collections.

Combined with Australia’s strengthened transfer pricing rules and our world leading anti-avoidance rules, the Commissioner’s work will maintain the integrity and fairness of our tax system and help us collect the right amount of tax.

Further cooperation amongst our tax authorities at an international level will complement the fight against tax avoidance. This work will help our authorities better understand the activities of multinationals, assess where the risks lie and help target compliance activities.

We are not satisfied with the behaviour of some multinationals, where they create an uneven playing field for our small businesses, and unfairly shift the tax burden.

Supporting greater tax transparency and information exchange is a key way to crack down on tax avoidance and evasion.

Australia is already a leader in the automatic exchange of information. Tomorrow the G20 will endorse the finalised common reporting standard for the automatic exchange of information.

This will allow us to identify offshore income of multinationals and high wealth individuals, so there will be nowhere to hide.

Today, Australia starts the process by committing to implement the new reporting standard in 2017 with the first exchange a year later. The G20 is a leader in the early implementation of the standard and we will be urging all countries, including financial centres, to match the G20’s commitment.

The ATO’s offshore voluntary disclosure initiative, ‘Project DO IT’ gives Australian residents who have offshore investments the opportunity to disclose their assets with a reduced penalty.

People have until the end of this calendar year to disclose unreported foreign income and assets. I strongly encourage them to do so now because there is a new global regime on tax transparency that will find them out.

The fight against tax evasion and avoidance is global. This is why it is so important that developing and low income countries are part of our solution. The G20 and OECD have been working hard to ensure that these countries benefit from our agenda. In Cairns, we will be agreeing to a multi‑year agenda on tax and development.