Treasury Laws Amendment (International Tax Agreements) Bill 2019

Treasury Laws Amendment (International Tax Agreements) Bill 2019

Treasury Laws Amendment (International Tax Agreements) Bill 2019

The Treasury Laws Amendment (International Tax Agreements) Bill 2019 is a crucial piece of legislation that aims to strengthen Australia`s international tax treaty network. The bill was introduced by the Australian government to parliament on 24 July 2019, and it seeks to implement changes to the domestic law that will align it with the international tax treaty network.

The proposed changes in the bill include modifications to the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. These changes are intended to implement the recommendations of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Project.

One of the key components of the bill is the introduction of a new Diverted Profits Tax (DPT) regime. The DPT is designed to apply to foreign multinationals conducting business in Australia that engage in profit-shifting activities to reduce their tax liability. The tax will apply to companies with global turnover exceeding AUD 1 billion and Australian revenue over AUD 25 million. The proposed tax rate is 40% of the profits that are attributed to Australia, and it will be levied in addition to the standard corporate tax rate.

The bill also seeks to update Australia`s network of tax treaties to ensure that they are consistent with current international tax standards. The changes will ensure that Australia`s tax treaties are aligned with the Multilateral Instrument (MLI) agreed upon by the OECD member countries. The MLI is a multilateral agreement that enables countries to modify their tax treaties to align them with the BEPS project recommendations.

The proposed changes in the bill are expected to enhance Australia`s international tax treaty network and strengthen the country`s ability to prevent tax avoidance. The bill is part of the Australian government`s efforts to combat multinational tax avoidance and promote fairness in the tax system.

In summary, the Treasury Laws Amendment (International Tax Agreements) Bill 2019 is a crucial piece of legislation that seeks to align Australia`s domestic tax laws with international tax standards. The proposed changes, including the introduction of the DPT regime and updates to Australia`s tax treaties, will help prevent tax avoidance and promote fairness in the tax system.