Cormann outlines major tax reform in Crawford address

Former finance minister and OECD Secretary-General Mathias Cormann has detailed a new plan to ensure large multinationals pay their fair share of tax, in an address to the 2021 ANU Crawford Leadership Forum. 

"It's very important to ensure that large multinational digital businesses, and all large businesses in fact, pay their fair share of tax", Mr Cormann told the forum.  

"The current, outdated rules have allowed too many large multinationals to earn significant income around the world, without having to pay any, or very little, corporate tax. 

"Invariably, their local competitors remain liable to pay. 

"These inequities have to be addressed and ideally they have to be addressed in a multilaterally agreed way."  

According to Mr Cormann, reform is already a step closer.  

A new "two pillar" approach recently got approval from 133 countries at the G20 Finance Minister's meeting in July. 

"The OECD has been very successful over the past decade in helping to secure a globally fair and consistent approach when it comes to the fight against multinational tax avoidance," Mr Cormann said. 

"This new two pillar solution ensures that taxing rights on the profits from the largest multinational corporation are more fairly distributed. 

"It also sets unilaterally agreed limitations on tax competition for corporate income tax." 

The 133 countries agreed on a global minimum tax rate of "at least" 15 per cent for multinationals with more than 750 Euro in revenue. 

According to Mr Cormann this change is estimated to generate around 150 billion dollars US in new tax revenue globally per year.  

The aim is to have the agreement finalised by the G20 Leader's summit in October, with "practical implementation" from 2023.  

The ANU Crawford Leadership Forum runs until 7 September.