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Australian Government Coat of Arms

Budget | 2015-16

Budget 2015-16
Australian Government Coat of Arms, Budget 2015-16

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 .

Ensuring that businesses with economic activities in Australia pay tax in Australia

Flowchart depicting the Multinational Anti-Avoidance Law.