Australia announced that it will be introducing two new tax measures in its Budget on Tuesday. The first will ‘strengthen the anti-avoidance regime’ by introducing legislation that amended its GAAR to ‘deal with the activities of 30 identified multinational companies … diverting profits earned in Australia away from Australia to no or low tax jurisdictions’. The other is draft legislation for the application of GST (the sales tax that is the Australian equivalent of VAT) on digitally supplied goods.
Treasurer of Australia Joe Hockey MP said in a statement: ‘We now have a better understanding of how these companies have used contrived or artificial tax arrangements such as the much publicised “double Irish Dutch sandwich”. These contrived and very complicated arrangements have been used to avoid paying Australian tax.
‘After consultation with the UK, it is clear that we do not need to replicate their diverted profits tax. If we strengthen our own anti-avoidance laws to ensure the Australian Tax Office (ATO) has the powers to see through these contrived arrangements, then we will be able to recover the tax that should be paid in Australia. Our penalties for diverted profits will go further than the UK. The tax commissioner will have the power to recover unpaid taxes and issue a fine of an additional 100% of unpaid taxes plus interest. Australia has played a lead role in the BEPS programme that has helped facilitate this measure.
‘The second tax integrity measure will ensure that there is a level playing field for the suppliers of digital products and services in Australia in relation to the GST. It is plainly unfair that a supplier of digital products in Australia has to charge GST and an offshore supplier does not.’ Draft legislation is being been released for review. The revenue from this initiative is expected to be $350m over the next four years.
Australia announced that it will be introducing two new tax measures in its Budget on Tuesday. The first will ‘strengthen the anti-avoidance regime’ by introducing legislation that amended its GAAR to ‘deal with the activities of 30 identified multinational companies … diverting profits earned in Australia away from Australia to no or low tax jurisdictions’. The other is draft legislation for the application of GST (the sales tax that is the Australian equivalent of VAT) on digitally supplied goods.
Treasurer of Australia Joe Hockey MP said in a statement: ‘We now have a better understanding of how these companies have used contrived or artificial tax arrangements such as the much publicised “double Irish Dutch sandwich”. These contrived and very complicated arrangements have been used to avoid paying Australian tax.
‘After consultation with the UK, it is clear that we do not need to replicate their diverted profits tax. If we strengthen our own anti-avoidance laws to ensure the Australian Tax Office (ATO) has the powers to see through these contrived arrangements, then we will be able to recover the tax that should be paid in Australia. Our penalties for diverted profits will go further than the UK. The tax commissioner will have the power to recover unpaid taxes and issue a fine of an additional 100% of unpaid taxes plus interest. Australia has played a lead role in the BEPS programme that has helped facilitate this measure.
‘The second tax integrity measure will ensure that there is a level playing field for the suppliers of digital products and services in Australia in relation to the GST. It is plainly unfair that a supplier of digital products in Australia has to charge GST and an offshore supplier does not.’ Draft legislation is being been released for review. The revenue from this initiative is expected to be $350m over the next four years.
