Last week the UK Chancellor announced that the UK Treasury intends to introduce a “diverted profits tax” in April 2015.  This tax is intended to target multinational businesses generating profits in Britain which are “artificially shifted” abroad.

The Australian Government has stated that it has been in discussions with the UK Treasury and is determined to ensure that companies earning revenue in Australia pay tax to the Australian Government. After hosting the G20 summit in which profit shifting by multinationals was discussed, the Australian Prime Minister and Treasurer have announced their intentions to act swiftly and slightly faster than other countries in relation to this issue.

We understand that the Australian version of the tax will involve a 30% tax on profits declared overseas that are generated from revenue earned in Australia, expanding the Australian tax base in an attempt to keep up with the ever changing world of online and international business.

Draft legislation in relation to the UK tax is set to be released tomorrow, 10 December 2014 and we expect the Australian Government to make an announcement in relation to the Australian version of the tax later this week.

Next Steps

If you wish to discuss the implications of the above tax for your business, please contact Murray Howlett or Josh Meggs of the Taxation Services division on 07 3023 1300.