Multinational tax avoidance measures
The Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015, (the Bill), containing new multinational tax integrity measures was introduced into Parliament by the Treasurer on 16 September 2015. The Government expects that the Bill will become enacted law later this year. The Bill includes:
- The multinational anti-avoidance law (MAAL) to amend Australia’s general anti-avoidance provisions in Part IVA to “negate certain tax avoidance schemes used by multinational entities to artificially avoid the attribution of business profits to a permanent establishment in Australia”;
- Measures to implement the OECD country-by-country (CbC) reporting obligations in Australia;
- A substantial increase in penalties in relation to tax avoidance cross border transactions; and
- A definition of ‘significant global entities’ that each of the three above provisions will apply to, being groups broadly with global income of A$1 billion or more.
Exposure Draft (ED) legislation in respect of the MAAL was originally released on 12 May 2015 (the draft MAAL) when the announcement was made as part of the Federal Budget. ED legislation on the CbC and penalty provisions was released on 6 August 2015. Both measures have been subject to consultation. The Bill differs in parts from the original ED legislation and the accompanying guidance in the explanatory materials (EM) has been expanded: the more important changes are discussed below.