The Australian Labor government has introduced a bill to lock in a 15 percent global and domestic minimum tax for all multinational companies.
Companies with a revenue of $1.2 billion (US$805.67 billion or 750 million euros) will come under the new standard, effective from Jan. 1, 2024.
Australia’s current company tax rate sits at 30 percent for businesses with a turnover of $50 million. However, ministers and the Greens have long criticised multinationals for tax avoidance.
“These measures bring us into line with many other nations, including the biggest economies in the world that are all cracking down on multinationals to ensure they are paying a fairer share of tax,” said Treasurer Jim Chalmers and Competition Minister Andrew Leigh in a statement on July 4.
“Stopping a global race to the bottom in company tax helps all Australians. When multinationals pay less, individuals and domestic businesses pay more,” the minister said.
“Our economic plan is all about helping fight inflation and easing the cost of living at the same time as we get the Budget in much better nick.”
The move is part of the Albanese government’s commitment to Pillar Two of the OECD and G20’s Two-Pillar Solution, a multilateral agreement between 140 nations for a global standard.
Since 2013, the two global bodies have worked on the Base Erosion and Profit Shifting (BEPS) project. For years, the United States resisted supporting a global tax rate, but this position changed under the Biden administration.
Some economists not been keen on the idea.
Robert Carling, the former executive director of the New South Wales Treasury, previous said a global tax system would disrupt the free market, especially since tax breaks can often be the only tool for developing countries to attract investment.
