I. Australia

  • Australia in its 2016/17 Budget announced that the company tax rate for all companies will decrease from 30% to 25% over the next 10 years beginning with the year 2016-17.
  • Asset-backed financing will be given the same tax treatment as conventional financing from 1 July 2018 to enable Australian businesses to more easily access investment, generating growth and job creation. The Asset backed financing is similar to conventional financing but relies on the trading of assets, sharing of profits or leasing to finance an investment, rather than interest repayments, providing an alternative route for large and long term projects.
  • Changes to the tax and regulatory rules will be made to create two new forms of investment vehicles, a corporate collective investment vehicle from 1 July 2018 and a limited partnership collective investment vehicle from 1 July 2018. Creation of these investment vehicles are to encourage the export of funds management services from Australia.
  • Tougher laws and stronger compliance measures will be introduced to prevent multinational profit shifting and to improve corporate tax transparency. Apart from significantly enhancing the Australian Tax Office enforcement capabilities by establishing a new Tax Avoidance Taskforce, the 2016/17 Budget announces a Diverted Profits Tax ("DPT"), which impose a 40% penalty rate of tax on large multinationals (annual global turnover exceeding $1 billion) that attempt to shift their Australian profits offshore to avoid paying tax commencing on 1 July 2017. The DPT together with the Multinational Anti Avoidance Law that was introduced in the 2015/16 Budget are expected to raise around $650 million over four years from large multinationals.
  • Australian transfer pricing rules will be amended in line with OECD Transfer Pricing guidance. The new guidance will make clearer how intellectual property and other intangibles should be priced amongst businesses operating in different jurisdictions, emphasizing that pricing should be determined by reference to the substance of the transaction rather than contractual form.
  • Hybrid mismatch rules (measures that have been agreed by the OECD) will come into effect by around 1 January 2018 to close loopholes that allow multinational corporations to exploit the differences between tax treatment of entities and instruments across different countries, enabling them to obtain unfair tax advantages over domestic companies.

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