Australia Consults The Public To Toughen The Multinational Anti Avoidance Law

; posted on
February 13th, 2018

The Australian government opened a public consultation on a legislation draft regarding implementation issues of the Multinational Anti Avoidance Law (MAAL). The new proposal intends to strengthen the MAAL from inappropriate use of foreign trust or partnership to circumvent the application of the MAAL.

The Legislation Draft

Under current framework, companies controlled by foreign trusts or partnership may fall outside the scope of the MAAL, which is abused by some multinationals to avoid trigger the application of MAAL.The Australian government announced in the 2017-18 Budget that it would toughen the MAAL by preventing large multinationals from using foreign trusts and partnerships in corporate structures to avoid the application of the MAAL. This will ensure that the MAAL will continue to operate as intended. All interested parties are invited to submit responses to this consultation up until 23 February 2018.

MAAL

MAAL took effect from 1 January 2016 and prevents multinationals from escaping Australian tax by using artificial or contrived arrangements to avoid having a taxable presence in Australia. It applies to certain schemes on or after 1 January 2016, irrespective of when the scheme commenced, including:

  • a foreign entity supplies goods or services to an Australian customer
  • an Australian entity, that is an associate of or is commercially dependent on the foreign entity, undertakes activities directly in connection with the supply
  • some or all of the income derived by the foreign entity is not attributable to an Australian permanent establishment, and
  • the principal purpose, or one of the principal purposes of the scheme, is to obtain an Australian tax benefit or to obtain both an Australian and foreign tax benefit.

Sources: Australian Government

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