martes, 15 de marzo de 2016

New requirements announced to ensure multinational investors pay tax on earnings in Australia

The treasurer of Australia announced on 22 February 2016 that the Turnbull government will apply new requirements to multinational companies investing in Australia, to ensure that “companies operating in Australia pay tax on their Australian earnings.” The requirements will be imposed through additional criteria the government will consider when assessing a foreign person’s application to invest in Australia, effective immediately. The treasurer approved the first foreign investment application subject to the new rules on 23 February 2016.
Broadly, multinational companies will be required to comply with Australian tax law, and to provide information to the Australian Taxation Office (ATO) as directed, with respect to investments that require an application to the Foreign Investment Review Board (FIRB).
Multinational companies also will be required to advise the ATO if they enter into transactions with nonresidents that could be subject to Australia’s transfer pricing or tax anti-avoidance measures.
The new requirements will be imposed through the specific expansion of the “national interest” considerations that the government considers when assessing an application by a foreign person to invest in Australia. In particular:

  • The application must comply with Australia’s tax laws relating to the investment, or any transactions, operations or assets connected to the investment;
  • The applicant must use its best efforts to ensure its associates comply with Australia’s tax laws relating to the investment, or any transactions, operations or assets connected to the investment;
  • The applicant must provide, and use its best efforts to ensure its associates provide, any documents or information requested by the ATO in connection with the application or the potential application of Australia’s tax laws within the timeframe specified by the ATO;
  • The applicant must notify, and use its best efforts to ensure its associates notify, the ATO if it enters into any material transactions or other dealings in connection with the investment to which Australia’s transfer pricing rules or anti-avoidance rules potentially could apply;
  • The applicant must pay, and use its best efforts to ensure its associates pay, any outstanding tax debt due and payable at the time of the proposed investment; and
  • The applicant must provide an annual report to the FIRB on compliance with these conditions.

If the government identifies a significant tax risk when assessing a foreign investment application, the investor may be required to enter into an advance pricing arrangement with the ATO, seek a ruling from the ATO or comply with other ATO directions. A breach of such conditions may result in prosecution, fines and potential forced divestment of the asset.
These changes add to the existing framework for approval of foreign investment that the government recently enacted and to the actions it has taken to strengthen Australia’s foreign investment rules, including transferring the compliance function to the ATO and introducing new and stricter penalties for breaches of the rules.
Source: Deloitte

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