The diverted profits tax (DPT) is one of many new measures introduced to tackle multinational tax avoidance. The DPT aims to ensure multinationals do not avoid their Australian tax obligations by entering into schemes to divert their Australian profits to offshore related parties. It imposes a 40% tax rate on the diverted profits (which is payable within 21 days of an assessment being made).
The DPT applies only to significant global entities, income years that start on or after 1 July 2017 and can apply to schemes entered into before 1 July 2017 which produce a tax benefit in an income year commencing on or after this date. The DPT also encourages multinationals to provide sufficient information to tax authority to allow for timely resolution of tax disputes.