On February 9, 2017 the Australian Government introduced a proposal into the Australian Parliament for legislation to implement a new Diverted Profits Tax. The legislation is supposed to commence on July 1, 2017.

The Diverted Profits Tax targets multinationals that enter into arrangements to divert their Australian profits to offshore related parties in order to avoid paying Australian tax. The Diverted Profits Tax will only apply to multinationals that have global income of more than $1 billion and Australian income of more than $25 million. Under the Diverted Profits Tax a 40% will be due over the diverted profits.

Click here to be forwarded to the proposal for a Diverted Profits Tax Bill 2017 that was introduced into the Australian Parliament on February 9, 2017.

Click here to be forwarded to the Explanatory Memorandum.

In addition to the proposal for a Diverted Profits Tax, also the Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017 was introduced into the Australian Parliament on February 9, 2017. This proposal includes the following two further measures to ensure that multinationals pay the right amount of Australian tax and comply with their tax disclosure obligations.

·   A 100-times increase of the maximum penalty for large multinationals where they fail to lodge tax documents on time. This means that the maximum administrative penalty for significant global entities that fail to comply with their tax reporting obligations will increase to $525,000. Furthermore the penalties for large multinationals are doubled when they make false or misleading statements to the ATO.

·   Amending Australia’s transfer pricing law to give effect to the 2015 OECD transfer pricing recommendations. These recommendations provide greater clarity on how intellectual property and other intangibles should be priced, and ensure the transfer pricing analysis reflects the economic substance of the transaction rather than just the contractual form.

Click here to be forwarded to the proposal for a Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017 as introduced to the Australian Parliament on February 9, 2017.

More detailed information can be found in the Explanatory Memorandum to which we already provided a link here above.

 Copyright – internationaltaxplaza.info

Follow International Tax Plaza on Twitter (@IntTaxPlaza)

and

Follow International Tax Plaza on Facebook