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Australian Reforms To Tackle Tax Base Erosion

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

15 February 2013


The Australian Government has unveiled reforms it says will boost its ability to tackle tax evasion and profit shifting.

The Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013 contains amendments to the general anti-avoidance rule, known as Part IVA, and the transfer pricing regime.

The Part IVA reforms are designed to ensure that the anti-avoidance provisions continue to counter schemes that comply with the technical requirements of the law but which, when viewed objectively, are conducted mainly to avoid tax. According to Assistant Treasurer David Bradbury, the amendments will protect revenue of over AUD1bn (USD1.03bn) a year.

The changes to the transfer pricing regime are aimed at its modernization. The intention is to provide a comprehensive regime that is better aligned with internationally accepted principles.

Announcing the legislation, Bradbury made clear that the Government expects multinational corporations to pay their "fair share" of tax. In his opinion: "Large multinational companies that use complex arrangements and contrived corporate structures to avoid paying their fair share of tax should not be able to hide behind a veil of secrecy."

The reforms will therefore "strengthen two of our key weapons in the fight against base erosion and profit shifting. They will help to protect the integrity of Australia's income tax system and make sure that large taxpayers pay their fair share," Bradbury added.

TAGS: compliance | tax | tax compliance | tax avoidance | revenue guidance | law | Australia | ministry of finance | legislation | tax planning | transfer pricing

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