Labor will introduce a Tax Haven Blacklist to appropriately vet investments from countries that fail to comply with international standards.
The following hot spots will be put on Labor’s blacklist: Cayman Islands, Bermuda, Andorra, Liechtenstein, Guernsey, Monaco, Mauritius, Liberia, Seychelles, Brunei, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, British Virgin Islands, Grenada, Montserrat, Panama, St Vincent and the Grenadines, St Kitts and Nevis, Turks and Caicos, US Virgin Islands.
The Liberals have dropped the ball when it comes to taking action against international companies exploiting tax loopholes in Australia.
The Treasurer recently approved the takeover of several Australian private hospitals by a company domiciled in the Cayman Islands.
The Foreign Acquisitions and Takeovers Act 1975 applies a broad national interest test to takeovers. A range of matters are considered in the national interest framework including the impact of foreign investment on Australia’s tax revenues and the character of the investor, such as whether the investor operates on a transparent commercial basis and is subject to adequate and transparent regulation and supervision.
Following significant public interest in the Brookfield acquisition of Healthscope, Labor has written to the Treasurer seeking clarification on the acquisition process.
Whether it is hospital buyouts or water buybacks, Labor’s believes that deals involving tax havens warrant extra scrutiny.
A Shorten Government will expect the Foreign Investment Review Board to consider dealings with these jurisdictions when assessing tax and transparency risks in foreign takeovers.
Labor won’t just stop there. Labor’s full tax haven crackdown is also includes the following measures:
- Royalty Integrity - stopping multinationals getting a tax deduction when they unfairly funnel royalty payments to arms of their own company that pose a multinational tax risk, particularly ‘treaty shopping’ to funnel royalties into tax havens like the Cayman Islands ($680 million forward estimates; $2.3 billion medium term)
- Stronger promoter penalty regime – multimillion dollar fines for people who promote tax haven tax avoidance schemes. Fines of up to $2.1 million for an individual or $10.5 million for a body corporate, or three times the consideration received or receivable, directly or indirectly, by the entity or its associates who promote tax avoidance schemes.
- Public reporting of country-by-country reports – so the public knows where a firm operates, how much revenue they book there, and how much tax they pay (if any). Publicly releasing high-level tax information about where and how much tax was paid by large companies (over $1 billion in global revenue).
- Publicly accessible registry of the beneficial ownership of Australian legal entities – fully implementing the G20 principles Australia signed in 2014 and ensuring transparency over who ultimately owns a company or trust, rather than just accepting who is listed on company paperwork.
- Whistleblower protection and incentives or rewards – providing protection for whistleblowers who report on entities evading tax including the use of tax havens to the Australian Taxation Office, as part of our overall whistleblower protection plan. Individuals who highlight tax evasion collect a share of the penalty collected.
- Mandatory reporting of ‘material tax risk’ (tax haven exposure) to shareholders – requiring companies to disclose to shareholders if the company is doing business in a known or suspected tax haven. A list of these jurisdictions would be maintained by the Australian Taxation Office and would be similar to the design of the European Union’s ‘blacklist’.
- Disclosure of ‘material tax risk’ for government tenders – amending government procurement process requirements so Australian Government tender process require all companies to state their country of domicile for tax purposes.
- Automatically denying tax deductions from companies for travel to and from tax havens and clamping down on unsubstantiated allowances for travel in tax havens. There is no reason why a company executive should get a $2,000 tax-free bonus for travelling to Bermuda.
- Crackdown on citizenship shopping – requiring all individual Australian taxpayers to notify and declare to the Australian Taxation Office if they have residency or citizenship of any other jurisdiction and the name of that jurisdiction.
- Public reporting of AUSTRAC data – publicly releasing International Funds Transfer Instructions data for every calendar year.
- Responsible investment – tasking the Australian Taxation Office with creating or reviewing guidelines for responsible investment for superannuation funds.
Tax havens are used by drug dealers and arms traffickers. They are being abused by multinational firms to avoid paying their fair share of tax. Only Labor will crack down on the tax havens.