24 May 2018

Ensuring multinationals pay their fair share of tax


The Turnbull Government is continuing to ensure multinationals pay their fair share of tax here in Australia.

Legislation introduced into Parliament today specifically cracks down on hybrid mismatch arrangements.

These arrangements are used by multinationals to gain an unfair advantage, and avoid paying tax.

For example a company might claim a tax deduction overseas, and then claim another deduction for the same payment here in Australia. Claiming two deductions for the same payment means the company is essentially double dipping.

Australia's hybrid rules, due to start from 1 January 2019, aim to stop these multinationals gaming the system. They are designed to prevent double non-taxation benefits through denying deductions or including amounts in assessable income. The rules will apply to payments between related entities and parties to a structured arrangement.

The rules build on the significant action already undertaken by the Turnbull Government to tackle tax avoidance and close tax loopholes. This includes the Diverted Profits Tax, the Multinational Anti-Avoidance Law and the establishment of the Tax Avoidance Taskforce. Our crack downs on multinationals have already brought around $7 billion a year of sales revenue into our tax net.

The hybrid mismatch rules are a key output of the Organisation for Economic Co-operation and Development's (OECD) Base Erosion and Project Shifting (BEPS) project. The legislation introduced today takes into account the recommendations of the OECD and the Board of Taxation as well as feedback from public consultation on exposure draft legislation.