Global tax plan a good move, Turnbull says

·2-min read

Former prime minister Malcolm Turnbull believes an agreement by the world's major advanced countries to stop multinationals from avoiding tax in the countries where they make a profit is a good move.

A meeting of G7 finance ministers in the UK on the weekend agreed to a plan that would see big global companies pay a 15 per cent tax rate in the countries where they operate.

The plan will be later this year taken to the G20, a broader international forum of which Australia is a member.

Mr Turnbull says a global agreement is a vitally important measure to address havens where tax rates are either zero or low.

"This is a very good move," he told ABC radio on Monday.

"We have a vested interest in other countries cooperating to make sure that tax can't be avoided."

Prime Minister Scott Morrison will attend this week's G7 conference of leaders from Canada, France, Germany, Italy, Japan, the UK and the United States as an observer.

Mr Turnbull said under his leadership Australia made changes to prevent big tech companies from profit shifting.

"Facebook, for example, should pay tax on its profits in Australia, in Australia not in Ireland or Singapore," Mr Turnbull said.

This also happens with Australian resources companies, some of which have used trading hubs in Singapore and elsewhere to shift profits into low tax jurisdictions.

The agreement has again highlighted how high Australia's tax rate is for big business at 30 per cent.

Under Mr Turnbull, the government attempted to reduce it to 25 per cent but was thwarted in the Senate, with the lower rate only applying to businesses with an annual turnover of $50 million.

"Australia's corporate tax rate is high relative to others," Mr Turnbull said.

"The critical thing for us is to have a competitive tax rate."