Login
iscover
Yesterday, the government passed the Diverted Profits Tax through the Senate, however one of the major accounting bodies has highlighted that multinational tax avoidance is an issue that needs to be dealt with globally.
Newsletter
New law sheds light on global tax issues
29 March 2017
•
11 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
The Diverted Profits Tax, which passed through the Senate on Monday, will commence on 1 July 2017 and is expected to raise $100 million in revenue a year from 2018-19.
The Diverted Profits Tax, which was announced in the 2016-17 Budget, targets multinationals that enter into arrangements to divert their Australian profits to offshore-related parties in order to avoid paying Australian tax.
General manager of technical policy at the IPA, Tony Greco, told Accountants Daily that this latest tax is part of a wider crackdown on multinationals.
“This profits diversion tax is one of two or three things done recently. The first was Multinational Anti-Avoidance Law (MAAL), and then there's the Diverted Profits Tax and country-by-country reporting,” Mr Greco said.
“These measures are quite broad, extensive and complex, so one would have to argue that it is a move in the right direction as far as the Australian government is concerned.”
While this is positive, Mr Greco said that this is a global issue that should be dealt with from an Organisation for Economic Co-operation and Development (OECD) level.
==
==
“It's what we're going to end up with if every country implements their own rules, then there's potentially going to be problems where a multinational is taxed twice as much in multiple countries under different rules,” he said.
“Ideally we need to fix this on a global basis, but we can't wait for the OECD to finalise its action plans when money's tight and Australia's been running deceits. Everyone's been calling on the government to act, so it has to be done sooner rather than later.”
While waiting for the OECD to make progress, Mr Greco said that Australia is taking these steps to soften the blow.
“While the OECD tries to finalise measures, countries like Australia have decided to preempt some of those base erosion and profit shifting announcements and effectively address the leakage. We all know it’s here,” he said.
“Effectively, they're tightening the net on multinationals because they're structured in such a way where they can avoid tax on their activities. These measures are trying to address that leakage ahead of the BEPS Action Plan coming to fruition.”
You are not authorised to post comments.
Comments will undergo moderation before they get published.