The Multinational Anti-Avoidance Law (MAAL) is part of the government's efforts to combat tax avoidance by multinational companies operating in Australia.
The MAAL has been established to ensure that multinationals pay their fair share of tax on the profits earned in Australia.
The MAAL came into effect on 11 December 2015. It applies to certain schemes on or after 1 January 2016, irrespective of when the scheme commenced.
Broadly, the new law will apply if under the scheme, or in connection with the scheme:
- a foreign entity supplies goods or services to an Australian customer
- an Australian entity, that is an associate of or is commercially dependent on the foreign entity, undertakes activities directly in connection with the supply
- some or all of the income derived by the foreign entity is not attributable to an Australian permanent establishment, and
- the principal purpose, or one of the principal purposes of the scheme, is to obtain an Australian tax benefit or to obtain both an Australian and foreign tax benefit.
The MAAL only applies to significant global entities (SGEs). An entity is an SGE for an income year if it is:
- a global parent entity with annual global income of A$1 billion or more, or
- a member of a group of entities consolidated (for accounting purposes) where the global parent entity has an annual global income of A$1 billion or more.
This definition includes both:
- Australian-headquartered entities (with or without foreign operations)
- the local operations of foreign headquartered multinationals.
If global financial statements have not been prepared for the global parent entity, the Commissioner may make a determination that based on information available to him, the annual global income of the entity would be A$1 billion or more for the period.
Under the MAAL we can cancel any tax benefits an SGE, and its related parties, obtained from certain schemes described above. SGEs are also subject to increased penalties for tax shortfalls arising from the application of the MAAL.
Our Law Companion Ruling (LCR 2015/2) outlines how we will apply and administer the law. If you are impacted by the MAAL, we will work closely with you to provide greater certainty on how the law applies to you and, where appropriate, help you transition with certainty into compliant arrangements.
If you choose not to engage with us within the required timeframe, we will initiate compliance actions through our standard processes to review whether the MAAL applies to you.
- Significant global entities
- Combatting multinational tax avoidance – stronger penalties
- LCR 2015/2 Section 177DA of the Income Tax Assessment Act 1936: schemes that limit a taxable presence in Australia
- Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015External Link
- Tax Laws Amendment (Combating Multinational Tax Avoidance) Explanatory Memorandum (PDF 554KB)This link will download a file