Leading the global fight against tax avoidance
As the G20 President in 2014, Australia led progress on the OECD’s BEPS Action Plan to ensure multinationals pay the right amount of tax.
Australia is not waiting for the rest of the world to agree to all fifteen items of the Action Plan and is now taking the next step, consistent with the directions of the G20 and OECD dialogue.
We are acting now to commence implementation of four of the key actions that Australia delivered as G20 President to stop multinational tax avoidance.
1 Country-by-Country reporting
Australia will implement the OECD’s Country-by-Country reporting from 1 January 2016.
This measure will be a game changer in helping expose multinational tax avoiders.
For the first time, multinationals will be required to provide tax authorities with a global picture of their operations including income and tax paid in every country they operate in.
This information will be shared between tax authorities.
2 Treaty Abuse rules
Countries enter into tax treaties with each other to facilitate trade and investment. Tax treaties aim to avoid double taxation but some taxpayers exploit treaty rules to avoid taxation altogether.
The OECD has developed a plan to tackle this problem. While Australia already includes anti-abuse rules in its tax treaties, we will act now to incorporate the OECD’s recommendations into our treaty practice.
3 Anti-Hybrids rules
Different tax rules in different countries can allow multinationals to claim a tax deduction in one country but not pay tax in the other. The OECD has developed a draft plan to tackle this. Australia will be one of the first countries to act on these draft rules.
The Government has asked the Board of Taxation to consult on the implementation of these rules.
4 Harmful Tax Practices and Exchange of Rulings
Some countries provide secret or preferential tax deals to multinationals to attract their business, which can be harmful to other countries. The OECD has found Australia does not engage in any harmful tax practices.
The ATO has commenced exchange of information on secret tax deals provided to multinationals by other countries that may contribute to tax avoidance in Australia.
Public tax transparency code
To complement Country-by-Country reporting, which will provide enhanced information to tax authorities, the Government will also work with businesses to develop a code on the public disclosure of greater tax information by large corporates.
This code will provide support and confidence in our tax system by large corporates taking the lead and being more transparent to help educate the public.
The Government has asked the Board of Taxation to lead the development of this transparency code. Progress will be monitored and the Government will consider further changes to the law if required.
Stopping multinationals from shifting profit created in Australia to other countries to avoid paying tax anywhere in the world