|
Melissa Lim |
Although the government is yet to make a final decision on adopting the MLI, the consultation paper provides an outline of Australia's proposed policy with respect to the MLI, subject to consultation, as follows:
Apply the MLI to all bilateral tax treaties that do not already incorporate BEPS rules (which would exclude the 2015 Australia-Germany tax treaty that already incorporates most of the BEPS treaty-related measures);
Adopt the minimum standards and as many optional MLI articles as possible; and
Make limited use of reservations to MLI articles.
The 2015 Australia-Germany tax treaty illustrates Australia's likely approach to the MLI, where the recently re-negotiated treaty incorporated most of the BEPS treaty-related measures including on hybrids, anti-treaty abuse and ensuring effective and expanded mutual agreement procedures.
Administrative penalties to be increased for large multinationals
In addition to a series of integrity measures legislated or proposed to be legislated by the Australian government with respect to multinational tax avoidance (for example, the Multinational Anti-avoidance Law that took effect from January 1 2016 and the proposed diverted profits tax that is intended to take effect from July 1 2017), the Australian government has released exposure draft legislation, which if enacted, will increase the administrative penalties imposed on companies with global revenue of A$1 billion ($749.4 million) or more that fail to adhere to tax disclosure and related obligations. The proposed amendments are intended to apply from July 1 2017 and will:
Increase the maximum penalty to A$450,000 for multinational companies that fail to meet their reporting obligations; and
Double the penalties relating to making false and misleading statements to the Australian Taxation Office (ATO) with a view to discourage multinational companies from being reckless or careless in their tax affairs.
Discussion paper on the 'Netflix tax'
The ATO has released a discussion paper on issues concerning the recent extension of Australia's 10% goods and services tax (GST) to inbound supplies of intangibles such as digital content (often referred to as the "Netflix tax").
Australian GST law was recently amended to insert special rules for operators of electronic distribution platforms (EDPs), which ensures that such operators are treated as having made supplies of digital products and services through the EDP. This means that the operator (rather than the supplier) includes the value of the supplies in its GST turnover to determine whether it is required to register for GST, and pays the GST on supplies.
GST on low-value imports
The Australian government has also proposed to extend the 10% GST rate to goods valued at A$1,000 or less, imported from foreign sellers and EDPs that have an annual turnover of more than A$75,000 in Australia. Under the proposal, these foreign sellers and EDPs would have to register, collect, and remit GST on such sales.
Other
A recent Federal Court case (BCI Finances Pty Ltd (in liq) & Ors v Binetter & Ors [2016] FCA 1351) found that directors of a company had breached their duties as directors by engaging in a tax evasion scheme. In the case, the liquidators, which brought the action in the names of the companies but were effectively acting on behalf of the Commissioner of Taxation, were able to recover the tax debts of the companies concerned from the directors in their personal capacity.
Melissa Lim (melissa.lim@dlapiper.com), Sydney
DLA Piper
Website: www.dlapiper.com