Australia 2015 Budget: No Diverted Profit Tax but New “Multinational Anti-Avoidance Law”

OECD’s Country-by-Country reporting is coming to Australia starting on 1 January 2016.

Today the Australian government also announced the Multinational Anti-Avoidance Law:

“The Government is determined to do what is needed to protect Australia’s tax base and ensure all businesses pay their fair share of tax.

The Government is taking immediate action by introducing a Multinational Anti-Avoidance Law to stop multinationals artificially avoiding a taxable presence in Australia, and force them to pay tax in Australia on profits from economic activities undertaken in Australia.

Multinational Anti-Avoidance Law

From 1 January 2016, the new law will ensure that when Australian customers deal with an Australian subsidiary or local entity that is integral to the customer’s decision to enter into the contract, those Australian sales will be recognised as Australian income. Therefore tax will now be paid on profits from economic activities undertaken in Australia.

Approximately 30 large multinational companies are suspected of diverting profits using artificial structures to avoid a taxable presence in Australia.

Where the law applies, multinationals will be subject to the Government’s new doubled penalty regime for tax avoidance and profit shifting schemes.

This means that not only will tax avoiders need to pay the tax that they owe, they will also face penalties of up to 100 per cent of the tax they owe and interest.

This is only the beginning. The Government will commence consultations with the community on whether further amendments are required to Australian law, consistent with the work being carried out by the G20 and OECD, to address other profit shifting strategies used by multinationals to avoid paying tax in Australia on economic activities performed in Australia.”

More details are available here and here.

Robert Robillard, Ph.D., CPA, CGA, MBA, M.Sc. Econ.
Senior Partner, DRTP Consulting Inc.
514-742-8086; robertrobillard “at”

DRTP Consulting Inc. solutions go beyond transfer pricing and international tax solutions. The information in this blog post is general information only. Data and information come from sources believed to be reliable but complete accuracy cannot be guaranteed. DRTP Consulting Inc. or the author are not responsible or liable for any error, omission or inaccuracy in such information. The opinions expressed in this blogpost are those of the author. Readers should seek advice and counsel from DRTP Consulting Inc. as required.

Posted by drtp On 12 May 2015