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Australia To Talk To Multinationals Hit By Anti-Avoidance Law

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

08 October 2015


The Australian Taxation Office (ATO) is to enter into discussions with around 80 multinational companies that could be affected by the introduction of a new Multinational Anti-Avoidance Law (MAAL).

The legislation was introduced into Parliament in September by the then Treasurer Joe Hockey. It will require companies that "avoid" their taxes to pay double what they owe, plus interest. It will cover all multinationals operating in Australia with global revenues above AUD1bn (USD717.9bn). If passed, the legislation will enter into effect from January 1, 2016.

When Hockey first announced plans for the legislation in June, he said that around 30 large multinationals were suspected of diverting profits using artificial structures to avoid creating a taxable presence in Australia.

Australia's new Treasurer, Scott Morrison, told an October 7 press conference that if the legislation passes, "then the net, I suppose, is broadened from the 30 companies we're currently speaking to through the Australian Taxation Office and from the beginning of next year that would extend to around 80."

Tax Commissioner Chris Jordan said that the Office "will certainly be entering into discussions with around 80 multinational enterprises who will be potentially affected by that multinational anti-avoidance law." He added that "we know there are billions of dollars of sales that are booked overseas from activities that directly occur here in Australia."

According to Jordan, "the first stage is to have those sales booked here in Australia and then to work through with the companies the level of expenses under our transfer pricing laws that would be appropriate for them to pay for the intellectual property, for the services that are carried out overseas."

"So, it is a matter of the headline figure is billions in profit but that is the gross figure. We then have to fairly methodically work through with the companies what their relevant expenses that relate to that profit are and then come down to a net figure. So, that is the very difficult part right now."

TAGS: tax | interest | law | intellectual property | Australia | tax authority | multinationals | legislation | transfer pricing | services | Tax

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