On 20 April 2023, RSM Australia made a brief submission to Treasury regarding the proposed measure to deny deductions for payments relating to intangible assets connected with low corporate tax jurisdictions. 

Whilst in agreement, in principle, with the notion of multinational enterprises paying their ‘fair share’ of tax in Australia, the following concerns were flagged with Treasury:

  •    Absence of any ‘purpose’ or ‘motive test’; deny deductions for payments
  •    Lack of provision for instances where double taxation could effectively result;   
  •    Potential breadth of the definition of ‘low corporate tax jurisdiction’; 
  •    Lack of tracing requirements for back-to-back arrangements; and
  •    Lack of clarity regarding the purpose of the proposed measure and its intended interaction with the OECD’s Pillar Two project.  

It is conceivable that the foregoing could give rise to inequitable or impractical outcomes not intended by Treasury. 

view the submission here

For more information

For further information regarding the submission, please contact Liam Telford (National Tax Technical Director) at [email protected] or Liam Delahunty (International Tax and Transfer Pricing Leader) at [email protected]