28 January 2016
Media Release - #2016001, 2016

Coalition bolsters ATO in fight against multinational tax avoidance

Joint media release
with the Hon. Kelly O'Dwyer
 Minister for Small Business
Assistant Treasurer

The Turnbull Government has delivered on a commitment and taken further action to combat multinational tax avoidance with the signing of a new multilateral agreement to share tax information. This agreement will give the Australian Taxation Office (ATO) further scope to ensure companies pay their fair share of tax.

On Wednesday Australia was one of 31 countries to sign a multilateral agreement in Paris to share tax information on the activities of multinational companies.

The agreement will facilitate the exchange of multinationals’ country-by-country reports between tax authorities in different jurisdictions. These reports will contain details of multinationals’ international transactions, including the location of their income and taxes paid, as well as setting out their transfer pricing policies.

Country-by-country reporting is one of the outcomes of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project and a key component of the Turnbull Government’s recently enacted landmark multinational tax avoidance law.

Access to adequate transfer pricing information is essential to tackling international profit shifting. The agreement signed in Paris will enable the ATO to exchange key information on the activities of multinationals with foreign tax administrations in the most effective and efficient way possible.

The Coalition Government is committed to shutting down tax avoidance strategies used by multinationals who have exploited gaps and mismatches in the international tax system.

The Government inherited a tax system from Labor that had failed to keep pace with the changing times, the growing importance of intellectual property, digital technology and integrated global supply chains.

The Coalition has instituted a raft of measures to take aggressive action against multinational tax avoidance behaviour.

Critically, we have tightened our transfer pricing rules and introduced the Multinational Anti-Avoidance Law, which Labor voted against.

It is now harder than ever for companies to shift profit offshore by mispricing their dealings with foreign related entities.

The Government's Multinational Anti-Avoidance Law tackles companies who book their revenue offshore to avoid Australian tax. The ATO has stated that additional revenue from this measure alone shall be in the hundreds of millions.

Because of these changes the ATO is now well placed to ensure that major multinational companies are paying their fair share of tax in Australia.

The Turnbull Government will continue to hold multinationals to account for practices that avoid their responsibilities to pay their fair share of tax here in Australia.