(August 6, 2015)

On August 6, 2015 the Australian Government released for consultation Exposure Drafts to implement another two of the multinational tax integrity measures. In the 2015 Budget, the Australian Government announced a package of measures to address multinational tax avoidance. Exposure drafts to implement two of these measures (the multinational anti-avoidance law & extending the GST to digital products and services) were released on May 12, 2015. The Australian Government has now released for public consultation exposure drafts and relating explanatory materials with respect to:

 

  • introducing the new OECD standards on transfer pricing documentation and Country-by-Country reporting; and

  • doubling administrative penalties for multinational entities that are found to have entered into tax avoidance or profit shifting schemes.

     

Both these measures apply to entities with annual global revenue of $1 billion or more.

 

The closing date for submissions is set at September 2, 2015.

 

Country-by-Country reporting and new transfer pricing documentation standards

 

According to a press release as issued by the Australian Treasury, these amendments require entities with annual global revenue of $1 billion or more to file an annual statement with the Commissioner of Taxation.

 

An entity may be required to include in its statement one or more of:

  • a Country-by-Country report containing information on the location of the economic activity undertaken by the multinational group;

  • a master file, which provides a high-level description of the multinational group’s business operations; and

  • a local file, which describes the Australian entity’s operations and cross border related party transactions.

 

In this respect an exposure draft and an explanatory materials have been published. The explanatory materials a.o. discuss: 

  • Glossary

  • Chapter 1 Country-by-Country Reporting

    • Outline of chapter

    • Context of amendments

    • Summary of new law

    • Comparison of key features of new law and current law

    • Detailed explanation of new law

      • The OECD’s transfer pricing documentation standards

      • The reporting obligation

      • Example 1.1

      • Penalties for non-compliance

    • Consequential amendments

    • Application and transitional provisions 

Click here to be forwarded to the Exposure Draft and click here to be forwarded to the Explanatory Materials as available on the website of the Australian Treasury, which will open in a new window.

 

Stronger penalties to combat tax avoidance and profit shifting

 

According to the press release as issued by the Australian Treasury, the amendments double the maximum administrative penalties for large companies that are found to have entered tax avoidance or profit shifting schemes. These increased penalties only apply to companies with annual global revenue exceeding $1 billion and that do not adopt a tax position that is reasonably arguable.

 

In this respect again an exposure draft and an explanatory materials have been published. The explanatory materials a.o. discuss:

  • Chapter 1 Stronger penalties to combat tax avoidance and profit shifting

    • Outline of chapter

    • Context of amendments

      • Operation of the existing law

  • Summary of new law

  • Comparison of key features of new law and current law

  • Detailed explanation of new law

    • The global revenue threshold

    • Reasonably arguable position

    • Summary of penalty amounts

  • Application and transitional provisions 

Click here to be forwarded to the Exposure Draft and click here to be forwarded to the Explanatory Materials as available on the website of the Australian Treasury, which will open in a new window.

 

Further information on how and where to file a submission can be found in a press release that the Australian Treasury has published in this respect. Click here to be forwarded to the press release as issued by the Australian Treasury.

 

 

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