May 8, 2018 / 10:06 AM / a year ago

Australia to unveil proposals for multinational digital tax: Treasurer

CANBERRA, May 8(Reuters) - - Australian Treasurer Scott Morrison said on Tuesday he would unveil new proposals for taxing multinational digital companies within weeks, extending a concerted push by the Group of 20 nations to bring that sector into the global tax net.     \

Australia has been ramping up pressure on cross-border corporates since it introduced a Multinational Anti-Avoidance Law in 2016, along with a task force of some 1,000 specialist officers to police the new regime, which includes harsher penalties for those found flouting the rules.    

Morrison said the tougher procedures had already brought around A$7 billion a year in sales revenue by multinationals into the tax net.    

“But we need to do more,” he said in his budget speech to parliament, outlining the new changes. “The next big challenge is to ensure big multinational digital and tech companies pay their fair share of tax.”    

Australia has been at the forefront of a G20 crackdown on multinational tax avoidance, taking the unprecedented step in December 2016 of publishing the records of hundreds of companies, including Google Inc (GOOGL.O) and AppleInc APPL.O, which showed they paid little or no tax on their in-country earnings.    

The center-right coalition government last year introduced a UK-style diverted profits tax (DPT), that it expects to raise A$3.9 billion over the next four years. The DPT or so-called “Google tax” will tax multinationals on income they have sought to shift offshore at a penalty rate of 40 percent - well above the current 30 percent company tax rate.    

Earlier this year, it pledged changes to the tax treatment of stapled structures, which had allowed some foreign investors to pay tax of 15 percent or less, in contrast to the 30 percent corporate tax rate.    

It also promised to amend thin capitalization rules to prevent foreign investors from using multiple layers of flow-through entities, like trusts and partnerships, to convert their trading income into favorably taxed interest income.    

The changes to stapled structures come into force from July 1 this year, with the tightening of thin cap rules scheduled for the same date next year.

Reporting By JaneWardell; +61 2 93218165; Reuters Messaging: @TheJaneWardell

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