New Draft Bills in Commonwealth: Multinational Tax Avoidance
Monday 7 September 2015 @ 1.23 p.m. | Taxation | Trade & Commerce
At the beginning of last month (6 August 2015), the Commonwealth Government released two exposure draft bills aimed at addressing multinational tax avoidance, one of the Federal Government's key Budget 2015 measures.
The Tax Laws Amendment (Tax Integrity Multinational Anti-avoidance Law) Bill 2015 and the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015 are aimed at country by country reporting and scheme penalties for larger companies respectively.
Tax Laws Amendment (Tax Integrity Multinational Anti-avoidance Law) Bill 2015
According to the Exposure draft details, the schedule to this draft bill will amend the Income Tax Assessment Act 1997 (Cth) in order to change reporting obligations and exemptions for companies with an annual global revenue of $1 billion or more.
According to the accompanying explanatory materials, this draft Bill will implement Action 13 of the G20 and Organisation for Economic Co-operation and Development’s Action Plan on Base Erosion and Profit Shifting (the BEPS Action Plan) into Australian law. Action 13 has developed new standards for transfer pricing documentation and Country-by-Country reporting. These draft amendments will require the relevant entities to provide a statement to the Commissioner of Taxation with relevant and reliable information to assist the Commissioner to carry out transfer pricing risk assessments.
Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015
According to the Exposure draft, the schedule to this draft bill will amend the Taxation Administration Act 1953 (Cth) in order to double the maximum administrative penalties that can be applied by the Commissioner of Taxation to large companies that enter into tax avoidance or profit shifting schemes.
Reaction to Draft Legislation
Rod Houng-Lee, formerly Asia Pacific Tax Leader head of tax in Asia Pacific for big-four accounting firm PwC, told the SMH that a multilateral approach to addressing tax avoidance via the G20 and OECD was "doomed to fail" because there was "no possible outcome that could produce a "win-win" for the countries involved":
"More taxes collected by foreign governments must mean less tax collected at home.
This means that the biggest loser from an effective multilateral crackdown on tax
avoidance by MNCs [multinational corporations] would probably be the US – home to
most of the world's largest companies doing business globally."
Final submissions on the inquiry were due on 2 September 2015 and the final report is yet to be presented for debate in Commonwealth Parliament.
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Sources:
Draft Bills and Secondary Materials as reproduced in TimeBase LawOne
