Billionaire corporations pay lower effective tax rate than your average nurse, new study finds

20 April 2016
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Financial data from 76 of Australia’s largest multinationals has revealed they pay an average effective tax rate of 16.2% – half the corporate tax rate.

The data forms the basis of a new report that examines the financial records of the top 100 multinational corporations operating in Australia, based on research by tax experts at the University of Technology Sydney.

The report reveals:

  • Australia lost $5.37 billion in tax revenue in 2013 and 2014 from just 76 corporations;
  • Big pharmaceutical corporations paid the lowest effective tax rate at just 5.7% – compared to 7.5% for hi-tech corporations and 20% for energy corporations;
  • Energy corporations averaged the highest tax shortfall per company at $181,364,419.

The report finds that multinational corporations shift billions of dollars in profits offshore, while hard-working Australians are left to pick up the pieces, said Daney Faddoul, Senior Campaigner at GetUp.

“If just 76 multinationals were able to reduce their tax bill by $5.37 billion, imagine what the total lost revenue would be from the many thousands of corporations operating in Australia.”

“Everyday Australians are paying tax at a higher rate than billionaire corporations like Chevron, Apple and Google. These foreign multinationals are inflating their losses and shifting their profits to rob Australia of crucial investment in our local hospitals and schools.”

“The report offers concrete, actionable solutions to rampant corporate tax dodging, setting the bar for a corporate tax crackdown in Mr Turnbull’s May Budget.”

“Prime Minister Turnbull faces a choice: he can further the agenda of tax dodging multinationals, or he can ensure our kids are getting the best education possible and provide quality healthcare for all Australians.”

The report discusses two stand-out techniques favoured by large foreign multinational corporations operating in Australia. ‘Debt loading’ used by dirty energy corporations, and ‘profit alienation’ by pharmaceutical and hi-tech firms.

Recommended solutions include:

  • Follow Hong Kong’s example in tackling debt loading abuse, the Australian Government should eliminate interest deductions and other financial payments on loans from foreign subsidiaries located in low or no tax jurisdictions;
  • The Australian Government should introduce a Diverted Profits Tax, set at 30% to reflect the current statutory tax rate for companies, as in the United Kingdom;
  • The ‘Closing the Caribbean Connection: Solving Aggressive Tax Avoidance by Top Foreign Multinationals Operating in Australia’ report was funded by the donations of 1,713 GetUp members who pay their fair share of tax – and want to ensure multinational tax dodgers are doing the same.


To access the Summary Report: https://www.getup.org.au/caribbean-connection-summary

To access the Full Report: https://www.getup.org.au/caribbean-connection

 

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