(May 11, 2015) 

On May 11, 2015 on the website of the Hon. Joe Hockey, the Treasurer of the Commonwealth of Australia, a media release was issued by which Mr. Hockey announces that the Australian Government will be proceeding with two new major tax integrity measures in the Budget tomorrow. The media release mentions 2 measures:

·        Multinational Anti-Avoidance Law; and

·        Levelling the playing field for GST

Multinational Anti-Avoidance Law

In this respect the media release mentions that this measure deals with the activities of 30 identified multinational companies. According to the media release these companies are diverting profits earned in Australia away from Australia to no or low tax jurisdictions. The media release furthermore states that after months of the Australian Taxation Office being embedded in these businesses it now has a better understanding of how these companies have used contrived or artificial tax arrangements.

In the media release Mr. Hockey announces that tomorrow night he will be releasing legislation that strengthens Australia’s anti-avoidance regime. The media release furthermore states: “After consultation with the United Kingdom it is clear that we do not need to replicate their Diverted Profits Tax”. According to Mr. Hockey, if Australia strengthens its own anti-avoidance laws to ensure the Tax Office has the powers to see through these contrived arrangements, then it will be able to recover the tax that should be paid in Australia. It is also stated that the Australian penalties for diverted profits will go further than those of the United Kingdom. The latest remark that the media release contains regarding the Multinational Anti-Avoidance Law is that the Tax Commissioner will have the power to recover unpaid taxes and issue a fine of an additional 100% of unpaid taxes plus interest.

With respect to the Multinational Anti-Avoidance Law the media release contains 2 interesting attachments (Attachment 1: Application of multinational anti-avoidance law & Attachment 2: Multinational tax avoidance action plan)

Levelling the playing field for GST

According to the media release the intention of the second tax integrity measure to be introduced is to ensure that there is a level playing field for the suppliers of digital products and services in Australia in relation to the GST. With respect to this intended measure the media release does not reveal much more than that a number of other countries (such as Japan, Norway, South Korea, Switzerland and member countries of the European Union) have or will introduce similar rules.

Next to issuing a media release the Hon. Joe Hockey, the Treasurer of the Commonwealth of Australia, also gave a press conference.

Click here to be forwarded to the transcript of the media release as published on the website of the Hon. Joe Hockey, the Treasurer of the Commonwealth of Australia.

Click here to be forwarded to the transcript of the press conference of the Hon. Joe Hockey, the Treasurer of the Commonwealth of Australia.

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