Treasurer Joe Hockey will push to close tax loopholes being exploited by large multinationals – including tech giants like Google and Apple – at the G20 finance ministers meeting in Sydney this weekend .
He wants enhanced transparency through the automatic exchange of tax information among the G20.
This means companies won’t be able to escape tax no matter which country they hide in.
“This will help tax administrators know who is complying with the law and who is not,” Hockey told a meeting of the Institute of International Finance in Sydney.
“Solutions must be global.”
One recent example of a multinational earning large sums but paying little tax in Australia is Apple.
In 2013, the computer giant had revenues for more than $6 billion in Australia but paid just $56 million in tax.
Another is Google which reported paying just $4.1 million in tax on revenue of $268 million.
“The problems are perceived to be particularly acute for digitised on-line businesses although the issues are broader than that. The strains are evident, and there is world-wide dissatisfaction with tax outcomes.”
The erosion of domestic tax bases resulting from international tax planning takes advantage of the gaps in current taxation systems.
“Our tax systems were built for a world where business was predominantly confined to national borders,” Hockey says.
“This is not the reality of the twenty‑first century.”
Hockey chairs a meeting of g20 finance ministers in Sydney this weekend.