Multinational companies operating in Australia that move profits offshore to avoid tax will be penalised under new measures in the newly announced budget.
Companies found to be moving money in this way will face a ‘penalty charge’ of 40 percent – which represents a significant increase on the previous 30 percent charge, under the new measure known as the Diverted Profits Tax.
Treasurer Scott Morrison addressed parliament: "Everyone has to pay their fair share of tax, especially large corporates and multinationals."
Last year the Government introduced the Multinational Anti Avoidance Law (MAAL) to ensure that large multinationals operating in Australia are subject to the country’s tax laws. Along with the MAAL, the Diverted Profits Tax is expected to raise around $650 million over a four year period.
It has already been widely stated that this stronger stance on corporate tax evasion and avoidance will be used to help pay for the series of tax cuts announced in the budget. Furthermore, with confidence and the public’s perception of multinationals falling, the Turnbull Government will be able to act with more impunity when searching for funds.
Others are quick to mention the fact that, due to staffing cuts at the Australian Taxation Office and Australian Securities and Investments Commission, fewer companies breaking the rules have been prosecuted.
Business Review Australia & Asia's May issue is now live.
Follow @MrNLon and @BizReviewAU on Twitter.