The Turnbull Government continues to strengthen the integrity of Australia’s tax system by reducing opportunities for multinational tax avoidance and shining a light on the black economy.
Everyone, including multinational companies, has a responsibility to pay their fair share of tax in Australia on the profits they earn in Australia. This is important to ensure the Government can continue to provide the essential services and infrastructure that support the livelihoods of all Australians.
The Turnbull Government has already taken significant action to shut down loopholes and tackle tax avoidance head on. This includes introducing a strong Diverted Profits Tax and establishing a Tax Avoidance Taskforce in the Australian Taxation Office (ATO).
The Diverted Profits Tax imposes a 40 per cent penalty tax rate on Australian profits artificially shifted offshore by large multinationals. Commencing on 1 July it will provide the ATO with a formidable new tool to stamp out multinational tax avoidance. The Turnbull Government’s legislation will prevent large corporates using schemes to avoid Australian taxation by transferring profits or assets offshore through related party transactions that lack economic substance.
In this financial year the ATO has already raised $2.9 billion in tax liabilities from seven large multinational companies, and the ATO expects more than $4 billion in total liabilities this financial year from large public groups and multinationals.
This action includes challenging global restructures that introduce debt into Australian corporate groups and shift profits to low or no tax jurisdictions, often in conjunction with intra-group non-arm’s length transactions.
A further $550 million has been raised in this financial year from action against avoidance by private companies, trusts, high wealth individuals and promoters of tax schemes.
These tough actions are further supported by the Multinational Anti Avoidance Law, legislation that Labor opposed. This legislation prevents large multinationals from using an 'operate here, bill overseas' model to avoid a taxable presence in Australia.
Other important initiatives include the alignment of Australia’s transfer pricing laws with OECD recommendations, increased penalties for large multinationals that breach their tax disclosure obligations, and initiatives to improve corporate tax transparency.
The Multinational Anti Avoidance Law will be further strengthened in the Budget by extending it to corporate structures involving foreign partnerships and foreign trusts.
The Turnbull Government is taking action to address the significant, complex and growing economic and social problem of the black economy.
In December 2016, the Government established the Black Economy Taskforce to develop a whole-of government policy framework involving new proposals to tackle black economy activity.
The Government has released the Taskforce’s Interim report and accepted its recommendations for early action, including:
- The extension of the Taxable Payment Reporting System (TPRS) to the courier and cleaning sectors.
- A ban on the manufacture, distribution, possession, use or sale of sales suppression technology.
Following public consultation now in progress, the Taskforce will deliver a Final Report to the Government in October this year. The public are invited to make submissions at www.treasury.gov.au/blackeconomy.
Australia is also participating in the Extractive Industries Transparency Initiative, an international standard that requires companies and governments to report annually on payments in the oil, gas and mining sectors.
In addition, the Government has legislated the Common Reporting Standard, which will provide tax authorities with information on individuals with offshore accounts located around the world.
These latest actions build on the Turnbull Government’s strong action to address multinational tax avoidance and to further the fight against serious and organised crime.
By ensuring multinationals and individuals pay their fair share of tax, we ensure the sustainability of our tax system so that we can fund the infrastructure and services needed by Australians.