Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Hansard source

Firstly, in summing up, I would like to thank those members who have contributed to this debate. I thank them for the support for these measures that has been expressed by members on both sides of the House and, as we have just heard from the member for Melbourne, by the Greens, as well. This bill continues the government's strong stance against multinational tax avoidance. It implements three new measures announced in the government's 2016 budget.

Earlier today in question time I made reference to the results that the government is getting on making sure that multinationals pay their fair share of tax. Some $2 billion has been clawed back on the advice of the Australian Taxation Office from multinationals this year as a result of the measures we have already introduced. These measures go beyond those. Most taxpayers comply with Australia's tax rules and pay the right amount of tax. The coalition has always believed that taxes should be lower but that everyone should pay them. We should ensure a system of great integrity to make that the result. However, there are some who do not share that view and do not pay their tax, and there are some who try to avoid paying Australian tax by diverting Australian profits to low-tax countries.

The measures in these bills will help ensure that the Australian tax payable by significant global entities properly reflects the economic substance of the activities that those entities would carry on. This bill also encourages multinationals to provide relevant information and to cooperate with the ATO to ensure faster resolution of tax disputes. The diverted profits tax will strengthen Australia's anti-avoidance rules and complement our transfer pricing rules by targeting multinationals who enter into arrangements with offshore-related parties that lack economic substance to avoid Australian tax by diverting profits to lower tax countries. It is expected that the diverted profits tax will apply in very limited circumstances. Most companies do the right thing and meet their tax obligations. The diverted profits tax is focused on tax avoidance arrangements that are artificial or contrived. The diverted profits tax will allow the commissioner to impose the diverted profits tax on the basis of a reasonable assessment of the available information and impose an upfront tax liability payable on the amount of the diverted profits at a penalty rate of 40 per cent. Where a multinational changes a diverted profits tax assessment through an appeal to the Federal Court of Australia, they will generally be unable to introduce information that was not previously made available to the ATO.

We will also introduce tough penalties for multinationals who fail to comply with their tax reporting obligations from 1 July 2017. Large multinationals that breach their tax reporting obligations will now face penalties of $525,000 rather than $5,250. This increase is much more in line with the financial size and capacity of large multinationals and provides greater incentive to comply with their tax reporting obligations.

Transfer pricing rules will also be updated to give effect to the 2015 OECD transfer pricing recommendations. These changes will ensure our transfer pricing rules remain in line with international best practice. Together with the DPT, they will ensure that profits made in Australia are taxed in Australia. These changes also send a clear message to multinationals and the international tax community that Australia is absolutely committed to conducting multinational tax avoidance.

We continue to be a leader on the world stage in this regard. Just on the weekend when I was attending the G20 there was a substantial report provided by the OECD on the BEPS process which highlighted the fact that Australia was in the top of the pack when it came to implementing the base erosion and profit shifting agenda. We are a world leader when it comes to combating multinational tax avoidance. That is a far cry from the situation we inherited when we were elected to government in 2013. We have been an early adopter of the BEPS recommendations and are taking steps to ensure that our rules not only comply with our agreed minimum standards but are effective across all BEPS issues.

The international corporation which is essential to make these BEPS processes work has been brought about by both working through the OECD and the G20. I had the opportunity to thank the many other countries who have been working together on these measures. It means that you get a greater pressure on compliance between jurisdictions for companies that operate on a multinational basis. We continue to implement the OECD BEPS package and are currently progressing work on new rules to enhance the ATO's ability to detect tax avoidance by requiring advisers to report aggressive tax schemes to the ATO. The government is taking a strong, world-leading but balanced approach to multinational tax avoidance, and we are getting results. The Turnbull government has said that enough is enough when it comes to multinationals diverting profits offshore and failing to meet their tax disclosure responsibilities.

Once again, I commend the bill to the House.

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