Living within our means
Ensuring that the Government lives within its means
Continuing the fight against multinational tax avoidance
Taking on the tax dodgers
Ensuring big businesses pay the right amount of tax
The Government has some of the strongest multinational tax laws in the world. The Government is building on the success of the Multinational Anti-Avoidance Law (MAAL), which prevents multinationals from avoiding a taxable presence in Australia. The MAAL has already seen many multinationals restructuring to comply with the law.
The Government has taken decisive action to ensure our tax laws remain robust and that those who do business in Australia pay the right amount of tax on the profits they earn in Australia. This includes establishing a Tax Avoidance Taskforce and implementing a new Diverted Profits Tax on multinationals that artificially shift profits offshore.
This financial year, the ATO has already raised $2.9 billion in tax liabilities from several large multinationals.
Enforcement by a strong Tax Avoidance Taskforce
The Tax Avoidance Taskforce, led by the Commissioner of Taxation, Chris Jordan, is well underway in ensuring multinationals and high wealth individuals comply with our tax laws.
The Taskforce has been estimated to raise $3.7 billion in revenue over 2016-17 to 2019-20.
A powerful new Diverted Profits Tax
The Diverted Profits Tax imposes a 40 per cent tax on Australian profits artificially shifted offshore by large multinationals.
The Diverted Profits Tax will take effect on 1 July 2017 and will provide the ATO with a formidable new tool to stamp out multinational tax avoidance.
Other major Government initiatives now in place
- Australia’s transfer pricing rules have been aligned with OECD recommendations. Transfer pricing rules prevent profit shifting by ensuring payments are treated as occurring at arm’s length.
- Legislation has been enacted to significantly increase the penalties applied to multinationals that breach their tax disclosure obligations.
Clamping down on hybrid tax abuse
The Government will introduce anti-hybrid mismatch rules to prevent multinational banks and insurance companies from double dipping by exploiting different tax treatments of their regulatory capital across borders. Without these rules it is possible to get both a tax deduction and another tax concession for a single payment.
Extending the Multinational Anti-Avoidance Law to foreign partnerships and foreign trusts
The Multinational Anti-Avoidance Law will be extended to ensure corporate structures involving foreign partnerships and foreign trusts will now be subject to the law.
The OECD Multilateral Instrument
The Government is committed to protecting Australia’s tax treaties from being exploited by some taxpayers to avoid tax, and is participating in global action to ensure this protection through the Multilateral Instrument.
It has consulted on Australia’s adoption of the Multilateral Instrument which aims to ensure that profits are taxed where they are generated and where economic value is created.