Multinational anti-avoidance Law
The first measure aims to restore Australian taxing rights over “stateless” income which originates in Australia by ‘deeming’ a taxable presence.
Legislation will be announced that is intended to strengthen Australia’s tax anti-avoidance regime. It is aimed at companies that are considered to be diverting profits earned in Australia away from Australia to no or low tax jurisdictions. Following consultation with the United Kingdom it has been decided that Australia will not replicate their Diverted Profits Tax. It is however intended that Australia will strengthen its anti-avoidance laws to ensure the Tax Office has the powers to see through these contrived arrangements, Further, it is proposed penalties for diverted profits will go further than the United Kingdom. The Tax Commissioner will have the power to recover unpaid taxes and issue a fine of an additional 100% of unpaid taxes plus interest.
Levelling the playing field for GST
The second tax integrity measure will apply GST to digital material downloaded from ex-Australian suppliers and currently escaping Australian GST (colloquially dubbed the ‘Netflix Tax’). This is intended to ensure that there is a level playing field for the suppliers of digital products and services in Australia in relation to the GST.
The measure is expected to raise revenue of $350m for the states and territories over the next four years. It is in line with a number of other countries which have introduced, or will introduce, similar rules, such as Japan, Norway, South Korea, Switzerland and member countries of the European Union.