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Australia’s diverted profits tax could spark a global trend

February 14, 2017

Lena Angvik



On February 9, the Australian Parliament introduced a bill including a diverted profits tax (DPT). Could other countries looking to shore up their tax bases follow suit?

The DPT would allow Australia’s tax authorities to impose a 40% tax on profits diverted abroad by multinationals from July 1 2017. Those targeted are multinationals with an annual global income of A$1 billion ($768 million) or more and an Australian income of more than A$25 million that transfer profits offshore to avoid taxes. Multinationals with transactions and value chains involving entities in jurisdictions where the effective tax outcome is less than 24%, such as the UK, Singapore and Hong Kong, should be particularly alert to the DPT.

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