Research shows Australians’ stashed billions are costing the nation. 

A new global report reveals that Australians are estimated to have over $370 billion tucked away in foreign tax havens, leading to a significant loss of revenue for the nation's treasury. 

The latest Global Tax Evasion Report says that in 2020, profit-shifting by multinational corporations to low-tax jurisdictions cost the Australian government approximately $11 billion in foregone tax income.

While tax evasion has been decreasing, a disturbing trend emerges when it comes to global billionaires who maintain an effective tax rate of 0-0.5 per cent of their wealth. 

According to Gabriel Zucman, co-author of the EU Tax Observatory report, this is not a result of natural laws but of policy choices or a lack thereof.

He says that despite some progress in the fight against offshore tax evasion, more needs to be done. 

The report highlights that “global billionaires” continue to enjoy extremely low tax rates through the use of shell companies to avoid paying taxes on their income.

A 2021 agreement to establish a global minimum tax rate of 15 per cent for multinational corporations, endorsed by over 140 countries and territories, faces challenges due to existing loopholes. 

These carve-outs enable companies with economic activities in low-tax countries to continue paying less than 15 per cent, potentially leading to a race to the bottom in corporate tax rates.

The report says there is a need for governments to address these issues, particularly in the face of mounting pressure to reduce budget deficits and fund essential initiatives like the transition away from fossil fuels.

The EU Tax Observatory proposes two key solutions:

1. Implement a global minimum tax of 2 per cent on billionaires' wealth, potentially raising close to $250 billion from fewer than 3,000 individuals.

2. Strengthen the global minimum tax on multinational corporations by eliminating loopholes, potentially generating an additional $250 billion annually.

Taking these steps could significantly impact the finances of national governments, as over $1 trillion in profits were funnelled to tax havens in 2022, equivalent to 35 per cent of all multinational company profits generated outside their home countries.

Real estate also remains a blind spot in combating tax avoidance in Australia. 

Despite the country's lag in enacting reforms to combat money laundering in the real estate sector, this asset class, worth three times the stock market's value, can be used to conceal large sums of illicit funds.

In light of these findings, experts emphasise the importance of addressing tax avoidance to ensure a fair and functioning tax system.