The phrase “sunlight is the best disinfectant” neatly sums up the aim of Australia’s new corporate tax transparency laws.

International Consortium of Investigative Journalists (ICIJ) investigations including Lux Leaks, The Panama Papers, The Paradise Papers and Pandora Papers, famously outed the people behind the secret shell companies.

In the final sitting week of parliament in 2024, the Albanese government managed to pass one of the world’s strictest tax disclosure laws for multinational companies.

While it won’t name and shame individuals, every multinational operating in Australia now must publicly report on taxes paid, profits, the number of workers and other financial information in a broad list of jurisdictions.

The government’s legislation, known as public country-by-country reporting (CBCR), will be able to determine if genuine business operations align with where profits are booked, and taxes are paid.

Multinationals will be required to report tax data for the July 2024 financial year onwards.

The new laws will basically out the multinational corporations that fail to meet their corporate tax obligations by shifting profits to once notorious tax haven jurisdictions.

In 2022, it was estimated that globally multinationals shifted $US1 trillion into tax havens, equivalent to over one-third of all profits booked outside headquarters countries.

Business lobbies had been fighting the tax transparency laws, and managed to delay their introduction in 2023, arguing it goes far beyond tax transparency disclosures offered in other jurisdictions including the European Union.

But with the support of crossbench senators, including Jacqui Lambie and David Pocock, and the Greens, the law passed on November 29.

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Which once-notorious tax havens will be covered by the laws?

The law applies to about 40 jurisdictions.

It includes Singapore and Switzerland that already have an international tax agreement with Australia, as well as other low-tax jurisdictions from Andorra to Cayman Islands and Panama.

While about 140 corporations, including BHP, Rio and Woolworths, already do some form of voluntary public country-by-country reporting, this would force all multinationals operating in Australia to open their books — and with far more detailed information than is currently available.

Currently data published annually by ATO shows 32 per cent of Australian public companies paid no tax in 2020-21 but it fails to include the reasons a company might have paid no tax. And it doesn’t give a detailed picture of where exactly they may be shifting profits to.

Labor’s Andrew Leigh said Australia’s public register builds on advances made in the EU and “will set the standard for corporate tax transparency”.

Jason Ward, principal analyst at the Centre for International Corporate Tax Accountability and Research, believes Australia is now leading the world in increasing tax transparency for multinationals.

“We hope that other jurisdictions will follow suit or push even farther using the GRI Tax Standard as the template, as Australia has done.”

The Tax Justice Network’s Mark Zirnsak said the laws would help expose tax avoidance, and by doing so, could reduce tax avoidance.

“The new law will help deter the tax dodging games that multinational corporations and their tax advisers have been able to play for too long to the detriment of ordinary people, who pay their taxes as required to fund the government services we all need and rely on,” Mr Zirnsak said.

These new laws come in the context of global efforts to introduce a global minimum tax rate of 15 per cent, which also will put pressure on companies to pay more tax in the jurisdictions they operate.

The idea of a global minimum tax was first proposed years ago.

In October 2023, more than 130 countries, including Australia, forged a deal.

The OECD’s global minimum tax agreement was also aimed at stopping multinationals from stashing profits in countries where they pay little or no taxes — better known as tax havens.

How soon will the public be able to view the tax transparency data?

The first publication is expected to be released in late 2026.

The laws will apply to all multinationals where $10 million or more of their aggregated turnover for the reporting period was Australian-sourced.

They will have to, for the July 1, 2024 financial year onwards, give this data to ATO and then the agency will upload it for the public to read on data.gov.au.

The multinational must give the report electronically to the ATO within 12 months after the end of the relevant reporting period.

It will need to correct “material errors” with the ATO within 28 days of the parent identifying or otherwise becoming aware of that error.

“Public CBC reporting improves how information is shared with the public to help compare entity tax disclosures, to better assess whether an entity’s economic presence in a jurisdiction aligns with the amount of tax they pay in that jurisdiction,” the ATO said on its website explaining the rules.

Penalties apply for non-compliance.

The law still gives the Tax Commissioner the ability to exempt an entity (a “full exemption”) or specify that an entity is exempt from publishing information of a particular kind (a “partial exemption”) for a single reporting period.

What about a register that names and shames individuals?

An area where the current government still hasn’t moved is introducing what’s known as a “beneficial ownership register”, which would make it harder for criminals to hide who they are and what they get up to.

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This register would give the public free access to the names of people behind secret assets and bank accounts.

The leak of the Panama Papers led to numerous government inquires and police raids, and helped recover more than $1.2 billion in back-taxes and penalties around the world.

And further investigations like the Pandora Papers named and shamed the people behind the secret shell companies.

Imagine the register was available for everyone to see rather than having to be outed to journalists who then push authorities to investigate?

A beneficial ownership register was an idea that the Labor Party and Coalition indicated they supported at the previous election.

Both major parties are yet to act.

A raft of other changes post the PwC tax leaks scandal await

Mr Zirnsak says the proposed anti-money laundering bill should also assist with addressing some cases of tax evasion.

But he worries the carve out for lawyers being able to claim legal professional privilege when they design structures to “conceal ownership and transactions from law enforcement is a significant loophole”.

He notes additional measures the government consulted on that follow on the PwC tax leaks scandal, that have not yet been implemented.

These include further improvements to promoter penalties for those promoting tax avoidance and tax evasion schemes.

He believes the ATO has less tools available to it to apply to cases of tax avoidance promoters compared to the IRS and the UK’s His Majesty’s Revenue and Customs (HMRC).

He also notes a proposal to give the Tax Practitioner’s Board (TBP) more penalty options rather than the option between just a warning and suspension or cancellation of a tax practitioner.

The powers would include infringement notices and enforceable undertakings.