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
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On September 30, 2016, the VAT authorities confirmed that VAT shall apply to directors' fees.
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