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| 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