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Australian Labor Party Announces Plans to Crackdown on Tax Havens Including a Blacklist, Royalty Restrictions, Public CbC Reporting, and Others — Orbitax Tax News & Alerts

Australia's Labor Party Shadow Assistant Treasurer Andrew Leigh has issued a release on the party's plans for a tax haven crackdown as Australia heads into a federals election on 18 May. According to the release, the plans include the introduction of a tax haven blacklist, to appropriately vet investments from countries that fail to comply with international standards. The list will include: 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 release also lists out the following planned measures:

  • Royalty Integrity - stopping multinationals from 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, and a stronger penalty regime for people who promote tax haven 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 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.
  • 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 the overall whistleblower protection plan, with individuals who highlight tax evasion entitled to 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, with a list of these jurisdictions maintained by the Australian Taxation Office that would be similar to the design of the EU's ‘blacklist’.
  • Disclosure of ‘material tax risk’ for government tenders – amending government procurement process requirements so the Australian Government tender process requires 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.
  • 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.

No indication of the intended effective dates of the measures is provided.