$600,000 a day. That’s how much one of Australia’s billionaires made on average last year. While households grapple with rising food, housing and energy costs, billionaire wealth in Australia continues to grow at extraordinary speed.
Each year, as political and business leaders gather in Davos for the World Economic Forum, these extremes sit side by side. Private jets arrive. Luxury hotels fill. And behind closed doors, the world’s most powerful actors discuss global challenges — including inequality and climate change.
But there’s usually something missing from those conversations: corporate tax avoidance.
Corporate tax avoidance plays a central role in driving the inequality these global leaders are concerned about. When large corporations avoid paying their fair share of tax, governments lose gob-smacking amounts of revenue that could be used to fund essential services and respond to the climate crisis.
Understanding how corporate tax avoidance works (and how to make tax fair) matters now more than ever.
What is corporate tax avoidance?
Corporate tax avoidance refers to the way some companies legally reduce the amount of tax they pay. These strategies comply with the letter of the law, but often undermine its purpose.
It’s important to distinguish between tax avoidance and tax evasion. Tax evasion is illegal and involves deliberately hiding income or falsifying records. Tax avoidance exploits gaps and mismatches between tax systems to minimise how much tax is paid.
While it’s certainly legal, corporate tax avoidance has serious consequences. It drains public revenue and shifts the tax burden away from large corporations and onto people who are less able to carry the load — workers, consumers and small businesses.
How do big corporations avoid paying taxes?
How do corporations avoid taxes in practice? The methods vary, but the idea is consistent. They shift profit away from where economic activity actually happens and into low-tax (or no-tax) jurisdictions. Let’s look briefly at four common approaches.
Tax havens
Profits are recorded in countries with very low or zero corporate tax rates, even when little real business occurs there. Oxfam has identified some of the world’s worst corporate tax havens enabling this behaviour.
Transfer pricing
Multinational companies trade goods and services between subsidiaries (separate legal entities of the same larger parent company) at manipulated prices, moving profits to low-tax locations.
Debt shifting and thin capitalisation
Subsidiaries in higher-tax countries are loaded with debt, allowing large interest deductions that reduce taxable income.
Aggressive use of deductions and credits
While deductions and credits are legitimate, they can be pushed far beyond their intended purpose.
Many large corporations do pay some tax, but it’s often far less than their profits and economic footprint would suggest they should.
Why corporate tax avoidance matters
Corporate tax avoidance doesn’t happen in isolation. When large corporations don’t pay their fair share, governments face hard choices: cut services, raise taxes elsewhere, or borrow more.
The impacts fall hardest on people already doing it tough, including women, First Nations communities and people living in poverty. Public services weaken. Investment in housing, healthcare and education reduces. And funding to address urgent climate change becomes harder to secure.
At a time of overlapping crises (rising living costs, escalating climate disasters and global conflict), the loss of public revenue caused by corporate tax avoidance is not abstract. It shapes people’s daily lives, particularly those grappling with poverty and inequality.
How much tax revenue is lost globally?
The scale of corporate tax avoidance is enormous. Governments lose hundreds of billions of dollars every year through profit shifting by multinational corporations.
The OECD estimates that global corporate tax revenue has been significantly eroded, with lower-income countries hit hardest because corporate taxes make up a larger share of their public revenue. This lost income represents schools not built, hospitals underfunded, housing denied and climate action delayed.
What the Australian government is doing (and why it’s not enough)
The federal Government has taken some steps to address corporate tax avoidance, including efforts toward a global minimum corporate tax, world leading public country by country reporting and greater transparency.
But progress remains slow and uneven with persistent loopholes and weak enforcement. Powerful corporate interests continue to resist reform.
Without stronger political will and international cooperation, current measures won’t match the scale or urgency of the problem.
How Oxfam is working to make tax fair
Oxfam is campaigning to change the rules that allow inequality to grow unchecked.
Through its Make Tax Fair campaign, Oxfam is calling on the Albanese governments to tax big corporations and extreme wealth more fairly, close tax havens, and ensure public revenue is used to support people — not private accumulation.
This work is grounded in evidence. Oxfam’s yearly global inequality reports, including Inequality Inc and Takers Not Makers, and Resisting the Rule of the Rich plus local research — ‘The Elephant in the Room’ make the case for bold action to tackle rising inequality.
Oxfam is calling for:
- fair taxation of corporate windfall profits
- taxes on extreme wealth
- an end to tax havens and financial secrecy
- tax systems that support climate action and social investment
What making tax fair would change
Making tax fair would unlock the resources needed to invest in what matters: affordable housing, strong healthcare systems, quality education, humanitarian aid and meaningful climate action.
It would also help rebalance an economy where wealth and power have become dangerously concentrated — building a system that works for everyone, not just the richest few.
What you can do
Corporate tax avoidance is a systemic problem. And systems change when people demand better. People power makes a difference — governments act when voters make something impossible to ignore.
All lives are equal. No one should struggle to put food on the table in a country where wealth is growing by $600,000 a day for the people at the top. (Spoiler: 3.5 million Australian households struggle to put food on the table.)
Let’s fight for a society without the inequalities that keep people in poverty. Make tax fair.