Andrew Leigh, the Australian Assistant Minister for Competition, Charities, and Treasury, announced that Australia is committed to multinational tax reform through a Statement of Support for the OECD’s ‘Subject to Tax Rule’ on 20 September 2024.
The ‘Subject to Tax Rule’ allows developing countries to apply a ‘top-up tax’ when certain types of income have not been taxed at a minimum rate.
The signing of the OECD Statement of Support follows the introduction of legislation in the Australian Parliament to ensure multinational companies pay their fair share, building on implemented measures such as:
- Tightening Australia’s thin capitalisation rules to reduce multinational companies’ ability to create artificial debt and reduce their tax bill.
- Creating a new disclosure law requiring Australian public companies to disclose information about their subsidiaries (including information on location of incorporation and tax residency).
- Requiring tenderers for Australian Government contracts valued above $200,000 to disclose their country of tax residency.
- Boosting funding for the Tax Avoidance Taskforce to bolster its work cracking down on tax dodging by multinational enterprises.
These significant steps place Australia among the lead jurisdictions working to improve the international tax system under the OECD/G20 Two Pillar Solution that was agreed in 2021.
Earlier, the OECD held a signing ceremony for the Multilateral Convention to Facilitate the Implementation of the Pillar Two Subject to Tax Rule (STTR MLI) on 19 September 2024. Although Australia participated in the ceremony, it did not sign or indicate any intention to sign the convention at the time.
