The government has introduced a bill that will implement its Diverted Profits Tax (DPT) proposal.
The government announced last year that it would crack down on profit shifting by multinational companies. The move followed a parliamentary inquiry that scrutinised the tax practices of number of tech giants, including Google, Apple and Microsoft.
The new tax will commence on 1 July. The government said it expects to raise $100 million in revenue a year from 2018-19.
The government has said that the new regime will complement the Multinational Anti-Avoidance Law, which was passed in 2015.
“The DPT aims to ensure that the tax paid by significant global entities properly reflects the economic substance of their activities in Australia and aims to prevent the diversion of profits offshore through contrived arrangements,” the bill’s explanatory memorandum states.
“It will also encourage significant global entities to provide sufficient information to the Commissioner of Taxation... to allow for the timely resolution of tax disputes.”
The tax will apply to multinationals that have global income in excess of $1 billion and Australian income of more than $25 million.
Companies that “transfer profits to offshore associated entities using arrangements entered into or carried out for a principal purpose of avoiding Australian tax” will be slapped with a 40 per cent tax rate, which will need to be paid immediately.