13/02/2015 Evasion, Avoidance or Simply Compliance? The G20’s Most Taxing Issue http://internationalbanker.com/finance/evasion-avoidance-simply-compliance-g20s-taxing-issue/ 1/5 The G20 Washington Finance Ministers and Central Bank Governors meeting takes place in the build up to the G20 Leaders’ Summit in Australia Evasion, Avoidance or Simply Compliance? The G20’s Most Taxing Issue By Sinclair Davidson, Professor of Institutional Economics in the School of Economics, Finance and Marketing at RMIT University in Melbourne Australia In November, Australia will host the G20 meetings in Brisbane. Included in an overly ambitious agenda is international tax avoidance or, as the OECD (Organisation for Economic Co- operation and Development) has labelled it, “base erosion and profit shifting”. This is an important debate. Unfortunately, business has been somewhat reluctant to engage in the issues and faces a period of prolonged tax policy uncertainty. Anti-business activists have already prepared the ground within Australia by producing a report that alleges that many large Australian companies pay little or no corporate income tax at rates well below the 30-percent statutory rate. The newly elected centre-right government is prosecuting the case with some vigour, with Treasurer Joe Hockey arguing that companies must both comply with the tax law and pay their fair share of taxes. In times gone by, complying with tax law was paying a fair share of taxation. In Australia, at least, big business pays a very fair share of income tax. According to OECD figures, Australian businesses paid 19.7 percent of total tax revenue in company income tax in 2011, compared to an average of 8.7 percent for the OECD as a whole. In short, there is no reason for the Australian government to believe that it is being short-changed in its company-tax receipts.