On 16 September 2015, the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 (the Bill) was introduced into Commonwealth Parliament. The Bill is aimed at scheme penalties for large company tax avoidance which was one of the current Gvoernment's Budget 2015 proposals.
As previously mentioned by TimeBase, the bill implements the government's 2015 budget commitment to combat multinational tax avoidance.
In particular, according to the Second Reading Speech:
"This bill implements a new multinational anti-avoidance law, stronger penalties for large companies that engage in tax avoidance and profit shifting, and country-by-country reporting to give tax authorities greater visibility of multinationals' tax structures. These three measures will apply to over 1,000 large multinationals operating in Australia with annual global revenue of $1 billion or more. These companies represent the highest risk to Australia's tax base. The measures are consistent with the government's commitment to deregulation and support for small business."
Schedule 1 to the Bill amends the Income Tax Assessment Act 1997 (Cth) and Taxation Administration Act 1953 (Cth) to include a standard and centralised set of concepts that can be used to determine whether an entity is a ‘significant global entity’.
Schedule 2 to the Bill amends the anti-avoidance provisions in the Income Tax Assessment Act 1936 (Cth) and the Taxation Administration Act 1953 (Cth) to introduce the multinational anti-avoidance law.
Schedule 3 to the Bill amends the Taxation Administration Act 1953 (Cth) to double the penalties imposed on significant global entities that enter into tax avoidance or profit shifting schemes. The amendments will not apply to taxpayers that adopt a tax position that is reasonably arguable.
Schedule 4 to the Bill implements Action 13 of the G20 and Organisation for Economic Co-operation and Development’s Action Plan on Base Erosion and Profit Shifting, which concerns transfer pricing documentation and Country-by-Country reporting, into Australian domestic law by amending the Income Tax Assessment Act 1997 (Cth).
According to the Second Reading Speech:
"We are continuing to work with the OECD and G20 to promote greater integrity in the international tax system and ensure that entities pay tax where they have earned their profits. The OECD will report to the G20 finance ministers in October 2015 on the outcomes and final recommendations of its action plan on base erosion and profit shifting."
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Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 and Secondary Materials as reproduced in TimeBase LawOne
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