Federal Treasurer Joe Hockey is hoping big businesses will put their hands up to disclose their tax affairs as part of a voluntary corporate disclosure code announced in tonight’s budget.
In a statement accompanying the budget papers, Hockey said he has written to the Board of Taxation, which he has asked to develop a transparency code for large corporates.
But given the disclosure code would be voluntary, it is unlikely large businesses would choose to have their tax affairs aired in public.
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While the budget also contains measures to penalise multinational corporations that aggressively minimise their tax bills, Hockey said the government wants to see more public disclosure of how much tax the big end of town pays.
“The voluntary code will highlight companies that are paying their fair share of tax,” Hockey said.
“It will also discourage companies from engaging in aggressive tax avoidance.”
Hockey said the Board of Taxation will provide “a business and broader community perspective” to the development of the voluntary code but said the large companies that are the target of the code will need to “consider what information is disclosed and how it is disclosed”.
Hockey said some Australian companies are “already leading the way” in this area and said the government will monitor the results of the code and “consider further changes to the law if required”.
While big business would be an unlikely supporter of the code, Hockey may find some support for his crack down on large tax dodgers among the opposition parties, including the Greens.
In April, the Greens party issued a discussion paper calling for companies that engage in international tax minimisation to be named and shamed and suggested whistleblowers should also get a cut of revenues collected through Australian Tax Office fraud cases.
Under the Greens’ proposal, Australia would introduce mandatory reporting of the ultimate beneficial owners of companies, with the worst offenders to be named and shamed by the ATO.
The Greens would also like to see companies forced to increase the amount of related party information they disclose in consolidated annual reports, including the revenues, profits, staffing levels and taxes paid in each country in which they operate or have subsidiaries.
The policy also calls for the reversal of 4400 jobs cut from the ATO over the past 18 months, increased information sharing between the ATO and the Australian Securities and Investments Commission, and proprietary limited companies would have to confirm to ASIC they remain small companies.