Laws have been passed by the Senate today to ensure that multinational companies pay their fair share of tax, said Assistant Treasurer David Bradbury.
The Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012 confirms that the transfer pricing rules contained in Australia's tax treaties and incorporated into domestic law provide assessment authority in treaty cases.
"Transfer pricing rules make sure that multinational companies are not able to avoid paying their fair share of tax by shifting their profits offshore," said Mr Bradbury.
"Profit-shifting can pose a serious threat to Australia's revenue base. In 2009, related party cross-border trade was valued at approximately $270 billion, representing about 50 per cent of Australia's cross border trade flows.
"Robust transfer pricing rules make sure that Australia's revenues are protected and large multinational companies pay their fair share of tax."
These changes apply to income years commencing on or after 1 July 2004, being the first income year following Parliament's last statement demonstrating its long held understanding that the law operated in this way.