Multinational Tax Integrity Proposed Changes – Payments for Intangibles

As part of the 2022‑23 Budget, an anti‑avoidance measure to prevent large multinationals from claiming tax deductions for payments relating to intangibles connected with low corporate tax jurisdictions was announced.

Treasury has just released the Exposure Draft of the proposed changes which amends the ITAA 1997 to introduce an anti-avoidance rule designed to deter Significant Global Entities (SGEs) from avoiding income tax by structuring their arrangements so that income from exploiting intangible assets is derived in a jurisdiction where no or low corporate tax rates apply, while tax deductions for payments attributable to intangible assets made by the SGE to an associate are claimed in Australia. This rule prevents the SGE from claiming tax deductions for such payments.

This anti-avoidance rule aims to prevent large multinationals from securing an unfair tax advantage over other Australian businesses and seeks to ensure that large multinational enterprises are paying their fair share of tax in Australia.

These amendments operate in respect of payments or credits an SGE makes to an associate, as well as liabilities incurred by an SGE from an associate, on or after 1 July 2023.

Click here to access the Exposure Draft and Explanatory Materials.

Multinational tax integrity – denying deductions for payments relating to intangible assets connected with low corporate tax jurisdictions | Treasury.gov.au

 

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