Government ramps up mission to enforce minimum tax for multinationals
The government announced it has published subordinate legislation rules as part of the implementation of minimum tax for multinationals.
The government has revealed development in its mission to implement a minimum tax for multinationals with the publishing of subordinate legislation in the form of Ministerial Rules.
According to the government, the legislation was published as part of Australia’s implementation of a 15 per cent global minimum tax and domestic minimum tax for large multinationals.
The rules’ publication followed the primary legislation to implement the global and domestic minimum tax which recently went through the passage of both parliament and royal assent.
The government noted that minimum taxes were a key part of a co-ordinated global approach by the OECD to put a floor on tax competition and establish a fairer domestic and international tax system.
Treasurer Jim Chalmers said the Albanese government was continuing to act so that multinationals paid their fair share of tax in Australia.
“To pay for the things that matter most to Australia like Medicare, pensions and housing, it’s important that multinationals operating in Australia pay their fair share of tax and that’s what these rules help achieve,” Chalmers said.
“Multinational companies making a profit in Australia should pay tax on those profits in Australia.”
According to the Tax Office, the government announced it would implement key aspects of Pillar Two of the OECD/G20 Two Pillar Solution on 9 May 2023 as part of the 2023–24 budget.
The original driving factor behind the implementation was to address the tax challenges that had arisen from the digitalisation of the economy.
The ATO said the government revealed the changes would mark a “pivotal step” in ensuring that multinational enterprise groups paid the right amount of tax in Australia.
Now legislated, a 15 per cent global minimum tax and domestic minimum tax for multinational enterprise groups with an annual revenue of at least €750 million was applied from 1 January 2024.
Chalmers said the global minimum tax would enable Australia to apply top-up tax on a resident multinational parent or subsidiary company where the group’s income is taxed below 15 per cent overseas.
The domestic minimum tax would also enable Australia to apply top-up tax for any low-taxed Australian income.
“The rules provide details on how multinationals should calculate any top-up tax. The rule will also ensure that future administrative guidance released by the OECD can be incorporated in a timely and efficient manner,” Chalmers said.
“An international tax system where big multinationals pay their fair share is better for small businesses, better for taxpayers and better for the economy.”
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