Charity says Malcolm Turnbull’s government losing more than $4bn a year due to tax avoidance by multinationals

This article is more than 3 years old

This article is more than 3 years old

Oxfam says Australia is losing more than $4bn a year due to tax avoidance by multinationals and warns the federal government should not join the race to the bottom on corporate tax rates.

In new research, the charity names the “world’s worst tax havens” that encourage multinationals to avoid their taxes, revenue that could be spent on schools, hospitals and tackling poverty.

While it says the Australian government has taken steps in the right direction to stop multinationals using tax havens, data released on Friday by the Australian Taxation Office showing more than one in three large companies are paying no tax is evidence more needs to be done.

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However, releasing the ATO’s corporate tax transparency 2015/16 report, the tax commissioner, Chris Jordan, clarified that no tax paid does not necessarily mean tax avoidance.

These companies may have incurred an accounting and tax loss in the current year or in prior years and are now using those to reduce current taxable income, Jordan said.

Even so, Oxfam says this is only part of the problem with countries around the world – including Australia – slashing or planning to slash corporate tax rates.

“There is no winner in this race to the bottom on corporate tax,” Oxfam Australia senior economist Muheed Jamaldeen said while releasing the research on Monday.

“The Australian government has a responsibility to join efforts to stop this race to the bottom on corporate tax rates and demand that companies pay their fair share at home and abroad.”

Oxfam notes the average corporate tax rate across G20 countries was 40% 25 years ago. Today it is less than 30%.

The Turnbull government continues to pursue its $50bn 10-year plan to incrementally lower Australia’s corporate tax rate from 30% to 25%.