Australia is attempting to curb offshore tax evasion with a global minimum tax. 

The new tax, set to launch next year, is designed to prevent multinational corporations operating within Australia's borders from skirting tax responsibilities.

Announced during the latest federal budget, the measures involve an extra levy imposed on companies with an annual global revenue of at least $1.2 billion. 

The move aligns with Australia's commitment, made alongside 130 other OECD countries and jurisdictions in 2021, to establish a 15 per cent global minimum tax. 

The implementation of the tax is slated for January 2024.

The primary objective is to counteract the long-standing practice of multinational corporations evading domestic taxes through offshore subsidiaries. Estimates suggest that this initiative could generate an annual revenue of around $330 billion.

The Australian Tax Office (ATO) says roughly a third of Australia’s big public companies did not contribute any tax during the financial year of 2021.

In 2016, approximately half of US corporate profits reportedly found their way into low-tax-rate countries such as Bermuda, the Cayman Islands, and others. The financial toll of this practice was estimated at around $1 trillion in lost tax revenue for various countries by 2019.

Professor Kerrie Sadiq, a taxation expert from Queensland University of Technology, says the new regime is “designed to address the really aggressive tax shifting strategies that multinational entities do”, and make it so that “putting money into tax havens where there's zero tax rate will have no effect anymore”.

Professor Sadiq, while supportive of the initiative, acknowledges that it may not fully address the core issue of multinational tax avoidance.