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Australian Government Coat of Arms

Budget | 2015-16

Budget 2015-16
Australian Government Coat of Arms, Budget 2015-16

Strong on multinational tax integrity

The Government is committed to ensuring that businesses with economic activities in Australia pay tax in Australia

Some multinational companies are not paying their fair share of tax. This is unfair for families and Australian businesses that do the right thing.

The Government is strengthening our domestic laws to combat tax avoidance by multinationals through:

  • a Multinational Anti-Avoidance Law to ensure that foreign businesses cannot escape the Australian tax net using contrived arrangements;
  • closing the digital loophole to ensure that GST is applied to digital products and services imported by consumers;
  • increasing penalties for tax avoidance by large companies; and
  • working with businesses on a code for the disclosure of the tax affairs of companies operating in Australia.

But this is not the end.

Multinational taxation is a key focus for governments around the world.

The Government is working with the United Kingdom and the OECD on further measures to combat multinational tax avoidance.

Australia is also continuing its strong international leadership in this area by actioning key elements of the G20/OECD Base Erosion and Profit Shifting Action Plan, developed under Australia’s G20 presidency:

  • country by country reporting and better transfer pricing documentation;
  • new rules to neutralise hybrid mismatch arrangements;
  • new practices that will prevent treaty abuse; and
  • exchanging rulings on preferential tax regimes.

This package builds on the Government’s record of strong action on multinational tax avoidance. It will significantly strengthen our tax system and provide a strong deterrent for tax avoiders.

Australian profits shifted overseas
This graphic represents an example of how profits are diverted from Australia. Australian customer exclusively deals with Australian subsidiary or local entity, but contract signed with a related company in another country.  Money is then channelled through a complicated set of arrangements to no or low tax jurisdictions, and then money is diverted to a tax haven to avoid paying tax anywhere.