The government’s proposed tax avoidance law will target multinational firms with global revenues of $1 billion or more, according to budget documents.
Companies caught cheating will also pay back double what they owe plus interest, treasurer Joe Hockey said during his budget speech on Tuesday night.
Hockey said the government’s new ‘Multinational Anti-Avoidance Law’ will stop multinationals using complex schemes to escape paying tax.
The government had identified 30 multinational companies that Hockey said have diverted profits away from Australia to avoid paying their fair share of tax in Australia.
“Under this new law, when we catch companies cheating, they will have to pay back double what they owe plus interest,” Hockey said during his budget speech.
“Everyday Australians rightly believe that if a dollar of profit is earned here, then you should pay tax here. Unfortunately, this is not always the case for some multinationals. Many have the capacity to aggressively minimise their tax.
“What that means is that families and small businesses are forced to carry more than their fair share of the tax burden,” Hockey said.
Hockey hasn’t name specific companies that are being slugged by a recent Senate inquiry into tax avoidance has seen the tax practices of Apple, Google and Microsoft come under scrutiny. These companies told the inquiry last month that they were being audited by the Australian Taxation Office.
The new law will apply to tax benefits obtained from 1 January 2016 (under both new and existing schemes).
Hockey also reiterated plans to introduce new laws to make digital downloads – including movies from services like Netflix, games and e-books – subject to the GST. The so-called 'Netflix tax' will add $350 million of additional GST revenue to the states and territories.
“A local business that employs Australians, pays rent in Australia, pays tax in Australia, and helps build our economy is disadvantaged by the current system,” he said.
“We will level the playing field for Australian businesses by mandating that foreign businesses supplying digital products and services are subject to the GST,” he said.
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