21 September 2018

Making sure foreign investors and multinationals pay their fair share of tax

Note

Joint media release with The Hon Josh Frydenberg MP  Treasurer

The Coalition Government is taking strong action to protect the integrity of Australia’s tax system, with the introduction of two bills that will further ensure that those who do business in Australia, pay tax in Australia.

The introduction of Treasury Laws Amendment (Making Sure Foreign Investors Pay their Fair Share of Tax in Australia and Other Measures) Bill 2018 and Treasury Laws Amendment (Making Sure Multinationals Pay their Fair Share of Tax in Australia and Other Measures) Bill 2018 helps us to better guarantee the essential services and vital infrastructure that Australians rely on, by ensuring foreign investors and multinationals pay their fair share of tax.

The first bill will crack down on foreign investors using complex arrangements known as stapled structures and accessing broader tax concessions on income from Australian investments so it is taxed at very low tax rates and, in some cases, almost tax-free.

Foreign investors include foreign sovereign wealth funds and pension funds as well as those who invest in Australian agriculture and residential property. The measure will see hundreds of millions of dollars of revenue being kept in Australia. Left as is, the amount of revenue being foregone could grow to billions of dollars.

The second bill helps ensure that rules tackling multinational tax avoidance, such as the Diverted Profits Tax and the Multinational Anti-Avoidance Law, apply to all relevant entities.

It will also prevent multinationals from manipulating the values of their assets to increase their debt deductions and reduce their tax payable in Australia as well as level the playing field for Australian hotel bookings by ensuring offshore sellers of hotel accommodation in Australia calculate their GST turnover in the same way as local sellers.

The Coalition Government is proud to have put in place some of the strongest tax integrity rules in the world. We are a global leader in the fight against multinational tax avoidance, having introduced a number of measures resulting in:

  • around $7 billion in liabilities being raised against large public groups and multinationals;
  • around $7 billion in sales income being returned to Australia each and every year; and
  • hundreds of millions of dollars of additional GST revenue.

Making sure foreign investors and multinationals pay their fair share of tax is part of the Coalition Government’s plan for a stronger Australian economy, more jobs for Australians and guaranteeing the essential services that Australians rely on.