The Turnbull Government's Multinational Anti-Avoidance Law (MAAL) powers have so far forced 24 multinational companies to either restructure their arrangements or signal their intention to do so in order to ensure they pay tax on what they earn in Australia.
Several of these taxpayers were already under audit when the MAAL commenced and are now adopting commercially realistic and compliant tax structures in response to this law. For example, Google has publicly admitted it was under audit and has announced it is restructuring to comply with the MAAL.
Our strong actions on combatting multinational tax avoidance are delivering results and successfully changing the practices of companies operating in Australia to ensure they book profits made here and pay tax on them.
Unlike the Labor party, who voted against the MAAL legislation in the Parliament, the Australian community is rightly concerned about multinational companies who make large profits while paying minimal tax, and as a government we are taking the fight to those that game the system.
The MAAL ensures multinational companies with global revenues above $1 billion who operate in Australia can no longer book revenue offshore to avoid paying tax in here. Most companies have got the message and are either working with the Australian Taxation Office (ATO) to unwind their arrangements or seeking assurance that their structures are compliant.
In discussions with multinational companies the ATO is also aware that some large Australian corporates are insisting on only dealing with the local Australian company rather than contracting with the foreign entity. This ensures that the sales are booked in Australia where the operations are and reflects the change this law is having on commercial practice in Australia.
The ATO has called in 175 multinationals who may be within the scope of the MAAL to provide certainty on their tax affairs and help them transition into compliant arrangements.
The ATO's focus is on examining these arrangements in detail, working out what's real and what's contrived, and determining appropriate action. So far, 70 taxpayers have provided information satisfying the Commissioner the MAAL wouldn't apply to their arrangements. 48 multinationals are being audited.
By the end of review of all multinationals in scope, the Commissioner expects that up to 80 will be audited.
The ATO has also issued taxpayer alerts and guidance which clarify what is allowed under the law. Three taxpayer alerts caution taxpayers and their intermediaries to be aware of the tax risks of entering into artificial and contrived arrangements to try to defeat the MAAL. Several taxpayers have walked away from those schemes after the ATO informed them that they were contrary to the MAAL.
The Turnbull Government's Tax Avoidance Taskforce is boosting the ATO by $679 million over four years so they can strengthen their multinational, private groups and high-wealth individual compliance targeting, backing in our anti avoidance laws. This Taskforce, announced in the 2016 Budget, is expected to raise more than $3.7 billion in tax liabilities.
Recently the High Court unanimously dismissed an appeal by Hua Wang Bank Berhad and Bywater Investments Limited, confirming the corporate entities were residents of Australia for tax purposes. The court found that the company should not be regarded as residing outside Australia merely because it had established a board of directors abroad to act upon the dictates of an Australian resident. This is another example of the Tax Commissioner using all available powers and resources to deal with cases of blatant tax evasion to ensure the law is upheld and the integrity of the tax system is maintained.
Under the Turnbull Government multinational companies are facing increasing pressure to ensure they pay the right amount of tax on the revenue they earn here.
Our laws are stronger than they have ever been and multinationals who choose to ignore the warnings can expect serious consequences.
The message is clear – multinationals cannot avoid their Australian tax obligations.