Thursday, 3 December 2015
Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015; In Committee
What I would say to Senator Lambie is that, truthfully, I do not know and I do not care. We determine public policy by what is in the public interest. What the government is doing here today is legislating a very robust multinational tax avoidance scheme which will ensure that multinational companies generating profits in Australia pay their fair share of tax in Australia.
This legislation, which hopefully will be passed tonight, will see the tax commissioner being given appropriate powers to be able to see through a whole range of contrived arrangements that are in place in relation to some of these companies from time to time.
So the bill in front of us today is a serious measure to combat multinational tax avoidance. These measures will force multinational companies with significant activities in Australia to pay their fair share of tax and level the playing field for all taxpayers. It will ensure that the Commissioner of Taxation can force multinationals that have significant activities in Australia to pay tax on profits from economic activities undertaken here. Multinationals will no longer be able to justify using contrived schemes to avoid paying tax.
This rule will strengthen our anti-avoidance rules for multinationals by catching arrangements that are designed to obtain both Australian and foreign tax benefits to stop companies claiming they are only seeking to avoid foreign tax and by lowering the purpose test from sole or dominant purpose to one of the principal purpose, making it easier to apply.
Where the scheme is captured, the Commissioner of Taxation will be able to look through the contrived scheme and apply the tax rules as if the multinational company had booked the profit from Australian sales here in Australia. Furthermore, penalties for larger companies that enter into tax avoidance or profit-shifting schemes will be doubled. This means that they will now pay tax on profits and they will pay more tax on profits, if they have sought to avoid paying tax.
Country-by-country reporting will require large multinationals to report additional information to the ATO. These are significant improvements in transparency that will help the ATO undertake targeted assessments of transfer-pricing risk.