Our latest insights

On 1 August 2022, Treasury released draft legislation to prevent the taxation by Australia of Indian resident firms providing certain technical services performed outside Australia to Australian customers.

On 20 July 2022 the ATO released its Taxpayer Alert TA 2022/2 to remind taxpayers not to undertake “treaty shopping” arrangements in order to reduce Australian withholding tax (WHT) under a Double Tax Agreement (DTA) in relation to a royalty or unfranked dividend payment from Australia.

As we come to the end of the financial year, its timely to review your upcoming tax compliance obligations. For multinational entities, the disclosures and complexities of tax compliance generally have never been more complex or challenging. Here are some of the main IDS issues to be aware of.

In October 2021, over 135 jurisdictions (including Australia) joined a ground-breaking plan to update key elements of the international tax system. The Global Anti-Base Erosion Rules (GloBE) are intended to ensure large multinational enterprises pay a minimum level of tax on the income arising in each of the jurisdictions where they operate. The OECD released the Pillar Two Model Rules on 20 December 2021, and Commentary to accompany the Rules on 14 March 2022. Further guidance is expected by way of an Implementation Framework, but that may not be completed and available until the end of 2022.

Australia entered into the Economic Cooperation and Trade Agreement (“ECTA”) on 2 April 2022. One surprising feature of the ECTA was the side agreement for Australia to essentially overturn, by way of domestic legislation, the result of the full Federal Court decision of Satyam Computer Services Limited v Commissioner of Taxation [2018] FCAFC 172. That case held that Australia had taxing rights over certain income (under the tax treaty between Australia and India) derived by primarily Indian offshore IT companies, even though those services were performed offshore, and even where Australia’s domestic legislation did not otherwise impose tax.

In our podcast, Tax Partners Vince Tropiano and Brett Curtis discuss what the global minimum corporate tax rate agreement means for Australian businesses, how businesses can prepare themselves, and what to consider if you’re setting up operations offshore.

The G7 this week has reached what has been described as a seismic agreement on global tax reform. The new rules, yet to be truly formulated, are meant to ensure that the world’s largest multinational technology companies will pay “their fair share” of tax in the countries in which they operate.

The United States national election is over, and while we await ratification of the results and inauguration of the new President, focus must now turn to the likely tax policies of the Administration of President Elect Joe Biden.

For many businesses, COVID-19 has been a trigger for developing or revising international strategies, with new markets and efficiencies being found in other countries: and India is consistently on the radar as one of the world’s largest economies.

The Tax Law Amendment (Combating multinational Tax Avoidance) Bill 2015 (“MAAL”) casts the spotlight onto corporate activity that encourages the reduction of tax liabilities in Australia.

Australia has continued its aggressive, unilateral approach to tackling Base Erosion and Profit Shifting, with the Diverted Profits Tax (DPT) introduced to combat multinational companies shifting profits out of Australia.