It is difficult for businesses to organise their cross-border transactions on the basis of a diplomatic press release. The Treasurer's announcement earlier this week of a joint working group between Australia and the United Kingdom on Base Erosion and Profit Shifting (BEPS) is one such example. The announcement does not propose a clear change to the domestic law which can be assessed in a meaningful way, and only adds to the uncertainty of our tax environment.
Domestically, we have the federal tax white paper process well underway. Hinting at an additional integrity measure in the form of a diverted profits tax, without holding it up to the scrutiny of the tax white paper process, suggests the government is making tax policy decisions on the run.
Internationally, the OECD countries are already working on a resolution to multinational profit shifting collaboratively. Australia and the UK working on their own, or with a handful of G20 countries on the same issue, may result in a doubling up of efforts and inconsistencies.
The Tax Institute's media release in relation to the Treasurer's announcement can be found here.
Thilini Wickramasuriya FTI is a Tax Counsel of The Tax Institute.
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.