The Australian government is pushing ahead with plans to establish a public register revealing the identities of the beneficial owners of shell companies, in an attempt to crackdown on multinational tax avoidance and corporate corruption, reports The Guardian.
Kelly O’Dwyer, the minister for financial services, has released a consultation paper calling for expert advice on how to set up and maintain a register.
She first announced her intention to set up a register in April last year, after public’s angry reaction to the Panama Papers scandal – and with the federal election looming.
A register of beneficial ownership would expose legal structures, such as shell companies, to greater scrutiny by allowing tax authorities to know the owner of each part of a business.
O’Dwyer said on Monday: “Improving transparency around who owns, controls and benefits from companies will assist with preventing the misuse of companies for illicit activities including tax evasion, money laundering, bribery, corruption and terrorism financing.
“The government is seeking feedback on what information needs to be collected in order to achieve this objective and how it should be collected, stored and kept up to date,” she said.
The government has given no indication of when it plans to establish the register. A spokesman said it would be a complicated matter requiring several legislative changes.
Andrew Leigh, the shadow assistant treasurer, has accused the Coalition of dragging its feet on the issue, saying he doubts its sincerity.
“The Turnbull government committed to implementing a beneficial ownership registry in April 2016, but almost immediately they started back-peddling faster than a staffer for Donald Trump,” he told Guardian Australia.
“In May 2016, their commitment to implement a registry became a much weaker promise to consult the public on the implementation of a registry.
“In October 2016, the government committed to consult the public by the end of December. It is now half way through February, and the government has only just released the consultation paper,” he said.
“The reluctance of the government to make good its promises on a beneficial ownership registry is because it is focussed on looking after the big end of town, rather than forcing multinationals to pay their fair share of tax.”
Parts of the corporate sector strongly opposed the government’s plan to establish a register when it was announced in April last year. Mark Leibler, a partner from Melbourne law firm Arnold Bloch Leibler, called it a “gross over-reaction” to concerns about tax avoidance.
Leaked documents last year revealed the Panama–based law firm Mossack Fonseca offered services to be a “registered agent” for hundreds of thousands of individuals and corporate clients seeking to set up shell companies in low-tax jurisdictions.
While it is not unlawful for Australians to set up and own offshore companies, it can be an offence to fail to disclose those assets to the Australian Taxation Office.
Australia’s December G20 report on beneficial ownership transparency said Australia’s classified Organised Crime Threat Assessment (OCTA) had specifically warned about the exploitation of complex business structures.
“In 2013 and 2015, the exploitation of complex ownership and control structures to effectively hide the ultimate beneficial owner was specifically identified as a current, key enabler of organised crime in Australia,” the G20 report said.
Submissions for the government’s consultation paper close on 13 March 2017.
But after the election, the Turnbull government reaffirmed its intention to establish a register, when it released its Open Government National Action Plan in October. The action plan said a consultation paper on a public register would be released by the end of December, but the deadline was missed.
O’Dwyer’s consultation paper, released on Monday, fulfils that commitment - albeit four months late.