The Treasurer of Australia introduced a Bill to implement the announced multinational anti-avoidance law to apply to foreign multinationals generating certain profits earned from Australia without an Australian permanent establishment; Country-by-country (CbC) reporting to the Australian Taxation Office; increased penalties for certain large company transactions on 16 September 2015.

The multinational anti-avoidance law is to apply in respect of tax benefits arising on or after 1 January 2016. The Bill amends the Part IVA anti-avoidance law, to target multinationals that implement arrangements to avoid having a taxable presence in Australia.

The Treasurer’s Second Reading Speech states that the Bill “further strengthens the draft legislation that was announced in the 2015 budget, by removing the condition for multinationals to operate in a low tax jurisdiction, All significant global entities with revenues over AU$1 billion who book their revenue offshore will need to consider these rules and may need to review their structures. With over 1,000 multinational entities operating in Australia with revenues greater than AU$1 billion, this means these rules will have far reaching effect and ensure multinationals do not inappropriately slip through Australia’s tax net.”

While the Explanatory Memorandum states the multinational anti-avoidance law is to apply to about 30 foreign multinationals as well as about 100 need to review their positions, the speech of Treasurer confirms concerns that the rules are broader in scope than previously announced.

Additionally, the Bill executes additional Country-by-country reporting requirements arising from the OECD Base Erosion and Profit Shifting (BEPS) program, including master file, local file and CbC reporting, with application to income years commencing on or after 1 January 2016.

The Bill also doubles tax penalties for larger companies in a variety of situations, with application to income years commencing on or after 1 July 2015.