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Australia To Combat Multinational Tax Avoidance

by Mary Swire, Tax-News.com, Hong Kong

16 September 2015


Australian Treasurer Joe Hockey has introduced the Combating Multinational Tax Avoidance Bill, which will require companies that avoid their taxes to pay back double what they owe, plus interest.

The law will cover all multinationals operating in Australia with global revenues above AUD1bn (USD717m). Approximately 1,000 companies will be affected. Hockey said they will "need to consider the new rules if they have economic activities in Australia but book their Australian sales revenue offshore."

"With the introduction of this legislation, we are sending a clear message that Australia has no tolerance for tax avoiders. If you are avoiding tax, the Australian Taxation Office (ATO) will catch you," Hockey stressed.

The legislation also provides for the implementation of the country-by-country reporting regime developed by the Organisation for Economic Cooperation and Development (OECD), along with new transfer pricing documentation standards. If passed, the legislation will enter into effect from January 1, 2016.

Hockey added that the bill "adds to the domestic action already put in place in this area to combat tax avoidance."

The Government has provided AUD87m to the ATO to focus on multinational tax avoidance, and the ATO's International Tax Division is now 14 percent larger than it was two years ago. The Government has amended the thin capitalization rules to prevent multinationals from shifting profits overseas through collective excessive interest deductions. From December 1, companies with a total income of more than AUD100m will be required to disclose details of their tax affairs.

TAGS: compliance | tax | tax compliance | tax avoidance | interest | law | Australia | ministry of finance | tax authority | offshore | multinationals | legislation | tax planning | transfer pricing | tax reform | standards

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