Multinational tax dodging costs billions

Nearly A$9 billion that could be spent on schools, hospitals and critical infrastructure in Australia and in poor countries is instead being hidden by Australian-based multinationals in tax havens, according to an Oxfam report released in June.

According to The Hidden Billions – How tax havens impact lives at home and abroad, and based on the latest available data, tax haven use by Australian-based multinationals cost Australia around A$6 billion in lost tax revenue annually, and cost developing countries an estimated A$2.8 billion every year.

Oxfam Australia Chief Executive Dr Helen Szoke said: "The Oxfam report, for the first time, puts dollar figures on what Australians and poor people in our region are missing out on because Australian-based multinational companies aren't paying their fair share of tax like the rest of us."

Globally, tax-dodging is rampant in developing countries, with big companies ripping A$209 billion of tax revenue out of their economies in 2014, money that could have been used to fight poverty and generate equality and prosperity.

Szoke said: "Over the next five years, it's estimated that Indonesia will be deprived of around A$493 million that could have gone towards education, and PNG stands to lose around A$23 million in expenditure on essential services such as hospitals, schools and sanitation. This is shocking, given in PNG, 60 per cent of the population don't have access to clean water. In Ghana, funding lost due to the use of tax havens by Australian-based multinationals could pay for an estimated additional 1,400 primary school teachers, and nearly 600 nurses, a year. In The Philippines, an estimated 1,700 new classrooms per year could be built.

"It doesn't have to be this way. Australia should show that it's tackling this issue by making the tax affairs of Australian-based multinationals public – not only for their operations in Australia, but for every country in which they operate.

"Our research relies on IMF data, which shows the flow of money from Australian-based multinationals. Unfortunately, there is no way to find out which individual companies are dodging tax, as they're not required to publish their tax affairs on a country-by-country basis."

Szoke said this lack of public reporting enabled big companies to hide billions of dollars they should be paying in tax: "Other countries, including the US, France and Canada, have made tax reporting public for high-risk sectors in big business, such as for mining companies and big banks; it's time Australia caught up."

Oxfam is calling on all political parties to commit to:

  • Make tax transparent at home and abroad;
  • Curb irresponsible use of tax havens;
  • Make multinational ownership information public;
  • Support developing countries with tax infrastructure; and
  • Support global action to end tax dodging.

The report was launched with a poll of over 1,000 Australians finding that 90% of Australians polled think the government should do more to stop multinational corporations avoiding paying tax in Australia and in every country in which they operate.

The Oxfam-commissioned poll also found:

  • 60% of Australians polled believe the main thing the Federal Government should do to raise revenue is crackdown on tax avoidance by multinationals;
  • 90% of Australians polled believe the Federal Government should legislate to prevent all multinationals operating in this country from moving their profits to tax havens to avoid paying tax here;
  • 87% think that those Australian companies who operate in developing countries and in Australia should publicly report their earnings and how much tax they pay everywhere.

The Hidden Billions report is posted at:

Published in Chain Reaction, national magazine of Friends of the Earth Australia, August 2016