(May 13, 2015) 

Over the last few weeks many of us have kept an eye on what the Australian Government was/is going to do. On April 19, 2015 there was a press release by Mr. Hockey (the Treasurer of the Commonwealth of Australia) announcing the urgent establishment of a UK-Australian joint working group to further consider and develop initiatives in relation to diverted profits by multinational enterprises. This was followed on May 11, 2015 by a media release on the website of Mr. Hockey, via which he announced that in the 2015-2016 Budget the Australian Government will be proceeding with two new major tax integrity measures. In the latter media release it was also stated that: “After consultation with the United Kingdom it is clear that we do not need to replicate their Diverted Profits Tax”.

On May 12, 2015 the Australian Treasury then launched two separate consultations on the following 2 measures:

·        Tax Integrity: Multinational Anti‑Avoidance Law; and

·        Tax integrity: Extending GST to digital products and other services imported by consumers

Unfortunately were not yet in the position to go through the draft legislation and explanatory material(s) to which the Australian Treasury invites interested parties to comment, but still we wanted to inform our readers that the draft legislation and explanatory material are available.

Tax Integrity: Multinational Anti‑Avoidance Law

With respect to this measure the announcement, attached to which one can find the draft legislation and explanatory materials regarding this measure, states that the purpose of this measure is to stop multinational entities using artificial or contrived arrangements to avoid a taxable presence in Australia.

The announcement furthermore states that the measure is intended to target situations in which: 

·        a foreign multinational supplies goods or services to Australian customers and books that revenue offshore;

·        the activities of an Australian entity are integral to the Australian’s customer’s decision to purchase the goods or services;

·        the profits from Australian sales are subject to low or no global tax; and

·        one of the principal purposes of the arrangements is to obtain a tax benefit.

The announcement also states that where the measure applies, the Commissioner of Taxation may cancel the Australian tax benefits obtained in connection with the scheme. It is furthermore stated that the measure will only apply where the non-resident's annual global revenue is greater than $1 billion.

For this consultation the closing date for submissions is set at June 9, 2015.

For further information click here to be forwarded to the announcement of the launch of the public consultation as published on the website of the Australian Treasury. The announcement has 2 attachments. The first is a document titled “Exposure Draft”. The second is a document titled “Explanatory Material”

Tax integrity: Extending GST to digital products and other services imported by consumers

Via a second announcement the Australian Treasury announced the launch of a separate public consultation regarding its proposed measure “Tax integrity: Extending GST to digital products and other services imported by consumers”. Attached to this announcement one can find the draft legislation and explanatory material regarding this measure.

According to the announcement the purpose of this measure is to ensure digital products and services provided to Australian consumers receive equivalent GST treatment whether they are provided by Australian or foreign entities.

The announcement furthermore states that the proposed amendments:

·        make the supply of anything other than goods or real property to an entity that is not registered or required to be registered for GST potentially subject to GST if that entity is an Australian resident;

·        provide that the GST will be payable on certain electronic supplies to which the above applies, by the operator of the service through which the supply is made to the consumer rather than the actual supplier; and

·        allow for the making of regulations to provide simplified rules for registration, tax periods and GST returns for entities to which the proposed amendments apply.

For this consultation the closing date for submissions is set at July 7, 2015.

For further information click here to be forwarded to the announcement of the launch of the public consultation as published on the website of the Australian Treasury. The announcement has 2 attachments. The first is a document titled “Exposure Draft”. The second is a document titled “Explanatory Material”

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