news The Senate has passed new legislation aimed to ensure tax is paid by major international companies that operate in Australia but book profits offshore.
The government said it is committed to ensuring companies that earn income in Australia and benefit from the Australian economy pay their fair share of tax in the country.
Under the new legislation, which is called the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill, companies caught cheating will have to pay back double the money they owe in tax, with interest.
“The government’s measures attack the heart of the multinational tax avoidance problem, whilst ensuring Australia remains an attractive and competitive place to do business”, the Treasurer Scott Morrison said in a statement.
The new bill will cover all multinationals operating in Australia with global revenues above $1 billion. The around 1,000 companies in this category will have to comply with the new rules if they have economic activities in Australia, but book their Australian sales revenue offshore. A number of major technology companies such as Google which currently funnel their Australian revenues through countries such as Singapore are expected to be affected by the legislation.
The laws also implement the OECD’s Country-by-Country reporting regime and new transfer pricing documentation standards, giving the Australian Tax Office (ATO) a better picture of how these multinationals companies internally operate, the statement said.
“This package of measures has been developed through an extensive feedback and consultation process undertaken by Treasury and as a result of having ATO officials working within key multinationals operating in Australia,” said Morrison. “The ATO now has additional detailed information of how many of these companies structure their tax affairs to avoid paying their fair share.
“Passage of this legislation sends a clear message that Australia has no tolerance for tax avoiders,” he said.
Morrison explained that the government consulted both with the ATO and Board of Taxation on the amendments, and later engaged with the Senate, including taking further advice on the amendments put forward by the Greens.
“While the government would have preferred the bill’s passage without the Greens’ amendments, we recognise that governing is about pragmatic choices and securing the best outcome available,” he said. “That’s why we have been prepared to work with the Greens in the Senate.”
Labor were similarly invited to the table but refused, according to the Treasurer.