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Australia collects more corporate tax as a share of GDP than most other OECD countries. In 2011‑12, Australia had corporate tax receipts of $66.6 billion, or 4.5 per cent of GDP and 22 per cent of total tax receipts. This means that Australia has a strong interest in monitoring and, where necessary acting on, developments that pose a risk to the sustainability of its corporate tax base.
A number of clear risks to the sustainability of the corporate tax regime have begun to emerge over the last decade. The increasing use of strategies to exploit gaps and inconsistencies in tax treaties, the increased 'digitisation' of industries and the challenges for the international community to effectively curb the harmful tax practices of some jurisdictions, have all highlighted shortcomings in the international tax framework.
This paper examines those risks. In doing so, with the issue of tax base erosion and profit shifting firmly on the G20 agenda, and with Australia chairing the G20 in 2014, this paper will also help inform the leading role that Australia can and should play in framing multilateral discussions on international tax reform going forward.