OECD denies claims it diluted Australian tax transparency bill

OECD denies claims it diluted Australian tax transparency bill

The OECD has rubbished media claims that it pressured Australian government into weakening the country’s tax bill aimed at tackling tax avoidance.

Last week, the Financial Times reported that “the OECD helped persuade Australia to water down a law that would have required thousands of multinationals to publicly say where they pay tax.”

Suggestions of OECD having interfered to stop Australia from passing a detailed tax transparency legislation were first reported by the Tax Justice Network two weeks ago, immediately after the Australian legislation was unexpectedly postponed.

The Australian legislation – Taxation Laws Amendment (Measures for Future Bills) Bill, 2023: Multinational Tax Transparency – Tax Changes – is considered as the biggest breakthrough to date in transparency on tax affairs of multinational corporations (MNEs). Australia’s tax bill, if enacted into law, would have required large MNEs operating in Australia to publicly publish their country-by-country reports.

This would have affected companies such as Amazon, Apple, Chevron, Coca-Cola, Ford, General Electrics, Johnson & Johnson, Mastercard, Microsoft, Nestle, Nike, Pepsi, Starbucks, Tesla, among others.

Rubbishing claims of interference, OECD Secretary General Mathias Cormann took to Twitter and said such claims were “false.”

In a two-page statement, Cormann said that “the team of technical experts in the OECD identified that the proposed bill risked, unintentionally, undermining and weakening the concerted global efforts to combat multinational tax avoidance, efforts in which Australia played an integral part.”

“This risked having knock-on effects around the world and in Australia,” he said.

Cormann said that the OECD experts “raised a number of technical issues that could be raised by international partners and also discussed possible unintended consequences, including that adopting the bill could cause some of Australia’s partners to cease to exchange country-by-country reports with Australian tax authorities.”

“This could have led to a weakening rather than a strengthening of Australia’s ability to tackle multinational tax avoidance,” the statement reads.

Cormann categorically rejected the claim by Financial Times that he was involved in the representations to the Australian government on the issue.

“Finally, the original repot in the Financial Times over the weekend also quoted inaccurate suggestions, since repeated by others, that I was involved in representations to the Australian government on this. I want to be very clear on this point. I did not engage with the Australian government in relation to this legislation in any way.”

An official statement from the OECD has not yet been published on the OECD website.

When asked for comment, Alex Cobham, chief executive of the Tax Justice Network, said: “Countries should consider very carefully indeed before making any binding commitments to the OECD proposals – it is clear that better alternatives are available, which will raise greater revenue and retain sovereignty. And the next step is to begin formal negotiations at the UN on a genuinely inclusive intergovernmental tax body.”