The Tax Justice Network’s Financial Secrecy Index ranks jurisdictions by their financial sector transparency and the scale of their offshore financial activities.
It ranks each country based on how intensely the country’s legal and financial system allows wealthy individuals and criminals to hide and launder money extracted from around the world.
Australia comes in at 48 out of 133 countries, down from 44 in its 2018 position.
“Australia accounts for less than 1 per cent of the global market for offshore financial services, making it a tiny player compared with other secrecy jurisdictions,” the report said.
In comparison, the Cayman Islands, the USA and Switzerland were found to be the most complicit in helping individuals to hide their finances.
While Australia continues to be a low-ranking player, the report noted that it “undoubtedly hosts significant quantities of illicit funds from outside the country”.
In a bid to tackle financial secrecy and tax evasion, the Tax Justice Network has called for bigger progress on country-by-country reporting.
The ultimate aim of country-by-country reporting is to capture and reduce profit shifting and tax avoidance through comprehensive exchanges of information between countries.
“Progress on country-by-country reporting remains slow, leaving unchecked the rampant tax abuse that disproportionally undercuts the people who start out with less opportunities in life to begin with,” said Tax Justice Network director Liz Nelson.
“While countries have dragged their feet on introducing public country-by-country reporting, corporations around the world have voluntarily begun to publish their country-by-country reports under the new GRI tax standard.
“The GRI tax standard published last year delivers the highest quality of public country-by-country reporting data, as formulated by experts from all stakeholder groups including multinationals and accounting firms. We urge the OECD to take onboard the robust transparency measures that responsible businesses and civil society groups have voluntarily rallied behind.”
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Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.