CONSULTATION ON MULTILATERAL TREATY PREVENTING TAX AVOIDANCE

The Government today has released for public consultation Exposure Draft legislation and an accompanying draft Explanatory Memorandum for the implementation of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the Convention).

Signed by Australia on 7 June 2017, the Convention is a key outcome of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, which aims to ensure that profits are taxed where economic value is created or added. 78 jurisdictions have signed the Convention.

Once in force, the Convention will efficiently and effectively modify the majority of Australia’s existing bilateral tax treaties to implement new integrity rules to protect them from being abused for tax avoidance purposes. It will also provide greater tax certainty and predictability for business through improved tax treaty-based dispute resolution mechanisms.

The federal Parliament’s Joint Standing Committee on Treaties has backed the Convention, recommending that binding treaty action be taken. Release of this draft legislation represents an important step towards the completion of Australia’s domestic processes to give the Convention the force of law in Australia. 

Implementing the Convention will help ensure that multinationals pay the right amount of tax on their Australian income. The Convention will complement the Government’s strong track record in preventing multinational tax avoidance and ensure that Australia remains at the forefront of global efforts to improve tax system integrity. The Exposure Draft legislation and Explanatory Memorandum are available on the Treasury website.

Submissions are due by Friday, 23 February 2018. The Government encourages all interested stakeholders to make a submission.