Australia’s Treasurer this week outlined Australia’s response to the release of the Organisation for Economic Cooperation Development (OECD) base erosion and profit shifting (BEPS) final recommendations. In general, the response and actions taken by Australia indicate that the Australian government believes that BEPS represents an important project regarding the protection of the Australia revenue base.
The Treasurer’s response highlights the significant work done to date in Australia in identifying areas where Australia’s revenue base is exposed. Action has been taken on a number of areas including:
The government has also requested a report from the Board of Taxation on hybrid mismatch arrangements and instruments, to be delivered in March 2016 (so it could be expected that measures on this BEPS action point would be announced by mid-2016).
The Treasurer’s press release indicates that apart from the above, significant changes to Australian domestic tax legislation would not be required, but that changes to Australia’s income tax treaties and accompanying guidelines (for example, transfer pricing) would happen.
The impact of changes to Australia’s network of income tax treaties and guidelines remains to be seen, with much depending on the actual changes and how they would be incorporated in the treaties. Some of the changes could significantly affect operations of multinational entities with business operations in Australia, in particular:
Read an October 2015 report prepared by the KPMG member firm in Australia: Australia's position on the BEPS package
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