The Turnbull Government is ensuring that those that do business in Australia pay tax in Australia. Improving the integrity of our taxation system helps to ensure the Government can guarantee the essential services that Australians rely on and leave more money in the pockets of hardworking Australians.
Legislation giving the force of law in Australia to the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the Convention) has today been passed by Parliament, further helping to ensure the integrity of Australia’s international tax arrangements.
The Turnbull Government is proud to have put in place some of the strongest tax integrity rules in the world. The Convention continues these efforts by establishing an efficient method for countries to modify their bilateral tax treaties to implement new integrity rules protecting tax treaties from exploitation for tax avoidance purposes.
The Convention forms a key outcome of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, which aims to ensure that profits are taxed where economic value is created or added.
Once Australia and its relevant treaty partners have completed their ratification procedures, the Convention will help ensure the majority of Australia’s bilateral tax treaties contain international best practice rules that address multinational tax avoidance.
The implementation of the Convention in Australia adds to the Government’s strong action to date, which has resulted in around $7 billion in liabilities being raised against large corporations and multinationals, around $7 billion in sales income being returned to Australia each and every year, plus hundreds of millions of additional GST revenue. The suite of measures the Government has introduced to crack down on multinational tax avoidance includes:
- the Diverted Profits Tax;
- the Multinational Anti-Avoidance Law (MAAL);
- strengthened transfer pricing rules to align with OECD BEPS recommendations;
- tightening the thin capitalisation rules;
- country-by-country reporting;
- doubling the maximum penalties for tax avoidance schemes; and
- establishing the Tax Avoidance Taskforce.