Strategizing Multinational Tax Risks

Australia’s Budget reveals its intent on becoming a leader in tax transparency and implementation of tools to address anti-avoidance initiatives.  The provisions cite OECD BEPS initiatives, while deciding to act unilaterally on draft guidelines and introducing new transparency standards within its various proposals.

This Budget may set the stage for others to follow similar trends and timelines; accordingly such actions should be monitored in Australia as well as the rest of the world.  The Public Tax Transparency Code is another signal that reporting of economic and tax activity will be used as a public measure to assess reasonableness for determining payment of a “fair share of tax.”

MNE’s have now fully realized the impending complexity, documentation demands and transparency standards that it will be judged by.  Internal education, communication and alignment are now vital in establishing a MNE’s global tax risk framework.  

A link to the Budget actions is provided for reference:

http://www.budget.gov.au/2015-16/content/glossy/tax/html/tax-05.htm

Key Corporate Tax provisions:

• Multinational Anti-Avoidance Law
  • Economic Australian activities = Australian taxation income
  • Penalties up to 100%, plus interest

• Country-by-Country (CbC) reporting effective as of 1/1/2016, consistent with OECD Guidelines
• OECD recommendations re: treaty abuse / non-taxation to be incorporated into tax treaties
• Draft OECD anti-hybrid rules to be implemented
• Public Tax Transparency Code to supplement CbC reporting
• Serious Financial Crime Taskforce to target serious financial crimes and tax evasion
• Common Reporting Standard to be adopted from 1/1/2017
• GST Compliance programme extended 3 years