Federal Government moves ahead with implementation of tax, targeting multinational avoiders
Free TV has welcomed the Federal Government’s introduction of legislation to force multinational tax avoiders to pay their fair share.
Yesterday, the government introduced legislation into Parliament to implement the new Diverted Profits Tax, which aims to prevent multinationals, such as Google, News Corp and Netflix, shifting profits made in Australia offshore to avoid paying tax.
The new tax will commence on July 1 this year and according to a statement from the Treasurer Scott Morrison is expected to raise $100m in revenue a year from 2018-19.
Free TV CEO Brett Saville says they will continue to work with Government on reducing “outdated” license fees
Free TV CEO, Brett Savill, has welcomed the legislation, stating: “We strongly support measures that require foreign multinationals to be on a level tax playing field with their Australian based competitors.
“In addition to paying corporate taxes, Australian free-to-air broadcasters already face the highest licence fees in the world – 115 times higher than in the United States.
“We will continue working with the Government on reducing the outdated licence fees as the next critical step in ensuring Australians can continue to enjoy their favourite Australian drama and live sport free on TV.”
The new tax, which was announced in the 2016-17 Budget, targets multinationals that enter into arrangements to divert their Australian profits to offshore related parties in order to avoid paying tax.
It will not apply to managed investment trusts or similar foreign entities, sovereign wealth funds and foreign pension funds.
The DPT will only apply to multinationals that have global income of more than $1b and Australian income of more than $25m.
Yesterday, the government introduced the Combating Multinational Tax Avoidance Bill 2017 which includes two further measures to ensure that multinationals pay the right amount of Australian tax.
The first is to increase the maximum penalty by 100 times for large multinationals where they fail to lodge tax documents on time. The government is also doubling the penalties for large multinationals when they make false or misleading statements to the ATO.
The second is to amend Australia’s transfer pricing law to give effect to the 2015 OECD transfer pricing recommendations. These recommendations provide greater clarity on how intellectual property and other intangibles should be priced, and ensure the transfer pricing analysis reflects the economic substance of the transaction rather than just the contractual form.
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