The Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 (Bill) was passed by the House of Representatives and the Senate late last night, the last sitting day of the year for the Parliament. The Bill contains the new Multinational Anti-Avoidance Law (MAL), as well as the increased penalty rules and the country-by-country reporting rules, which were originally announced on 12 May 2015. The latest Bill and its Explanatory Memorandum (EM) can be accessed here.
The Bill was originally agreed to by the House of Representatives on 19 October 2015, however it was sent back by the Senate on 11 November 2015 with proposed amendments by the Greens. As a result of the negotiated amendments between the Greens and the Government, the Commissioner will be required to publish certain information obtained from the tax returns of private companies where the private company has revenues of more than $200 million (private companies were previously exempt from the reporting information provisions). The Commissioner will require a general purpose financial statement to be lodged.
Australian Taxation Office response
In a recently released Law Companion Guideline (LCG 2015/2), the Australian Taxation Office (ATO) has asked for taxpayers that are likely to be impacted by the MAL to enter into early discussions with the ATO. The ATO is currently working on an internal framework for transitional arrangements for the MAL, including a client experience road-map.
Who is affected
The MAL will apply to global entities with A$1 billion or more annual global income (determined on an accounting consolidated group basis), where a foreign entity in the group makes supplies to Australian customers whilst avoiding the attribution of income to an Australian permanent establishment (pe).
What should be done
Revisiting existing structures
Multinationals should examine their existing structures that facilitate or carry out sales to Australian customers.
We recommend initiating discussions with the ATO about an existing or proposed structure before being approached, as reduced penalties may apply.