Australian officials have designed a six-nation alliance to combat multinational companies' strategies to avoid tax. China, Japan and Britain have already joined this Australian group and the United States is planning to join soon. Due to concern over potential outcry from many companies regarding the legality of the alliance, the identity of the sixth country is unknown.
Australian Tax Commissioner Chris Jordan responded to The Wall Street Journal's questions via email saying, "Australia has pulled together six major countries to sit down and share intelligence on the activities of multination enterprises. This collaboration has allowed us to better understand what is happening in our own countries and determine whether what is being represented in one country reflects what is being represented in another."
The goal of this alliance is to keep multinational companies from using methods such as relocating corporate headquarters to avoid paying tax.
The six-nation alliance will be working closely with a group of 20 industrial and developing economies to create a common set of rules on cross-border taxation.
Reports released last year stated that large companies such as General Electric and Apple have stacked piles of cash overseas totaling around $1.2 billion each. Furthermore, Australian officials have reported that Apple made around $8.9 billion in earnings which they moved to Ireland through Singapore. Other companies such Google, have been reported to pay only $500,000 in taxes to Australia while making an annual profit of $2 billion.
Both Apple and Google have issued statements saying they have complied with all tax laws in all countries in which they do business in.
Source: Taylor, Rob, "U.S. Ready to Join Six-Nation Tax Alliance," The Wall Street Journal, May 9, 2014.