The Australian government has legislated a new Diverted Profits Tax (DPT), which is expected to prevent the practice of multinational organisations shifting profits made in Australia offshore to avoid paying tax.
The DPT will hit multinationals with global revenue of more than AU$1 billion and Australian revenue of greater than AU$25 million with a 40 percent tax on all profits.
Slated to commence on July 1, 2017, the new tax is expected to see AU$100 million in revenue per year -- from 2018-19 -- stay on Australian soil.
The new law to combat multinational tax avoidance was announced in the 2016-17 Budget, with Australian Treasurer Scott Morrison saying its introduction was in response to calls from the public.
"These measures will raise an additional AU$3.9 billion in revenue over the next four years," Morrison said at the time. "Those seeking to do the wrong thing will be left with no doubt that deliberate tax avoidance and evasion will not be tolerated."
"Tax cheats will be tracked down and will face the full force of the law."
Along with the DPT, the government announced the creation of a 1,300-person Tax Office taskforce to crack down on multinationals and high wealth individuals, increasing protections for tax avoidance whistleblowers, and bumping up penalties on companies with incomes of AU$1 billion or more that fail to meet their disclosure obligations with the Australian Taxation Office (ATO).
The Commissioner of Taxation will also be provided with extra powers to achieve the government's projected cash recouping.
The DPT will not apply to managed investment trusts or similar foreign entities, sovereign wealth funds, and foreign pension funds.
The new legislation mirrors one by the same name implemented in the United Kingdom, which was nicknamed the Google Tax after the search engine giant was ordered to pay the UK government £130 million in back taxes.
It was revealed in December that for the 2014-15 financial year, Google, Apple, Samsung, and Microsoft upped the amount of tax they paid in Australia over the year prior.
According to the ATO 2014-15 Corporate Tax Transparency report, with revenue in the region totalling AU$8.3 billion, Apple coughed up AU$146 million in tax -- AU$72 million more than the iPhone maker did in 2013-14.
Similarly, Samsung, with 2014-15 revenue of AU$2.2 billion, paid AU$34 million in tax to the ATO, up from the AU$14 million it paid the year before. With AU$679 million in revenue for the same year, Microsoft paid AU$33 million in tax, while Google handed over AU$12 million in tax after earning AU$439 million in 2014-15.
For the same financial year, IBM Australia New Zealand Pty Ltd earned AU$3.6 million, Hewlett Packard South Pacific Pty Ltd earned AU$3.5 billion, and Dimension Data Australia Pty Ltd pulled an income of AU$1.2 billion. According to the ATO's report, not one of these three organisations paid tax in Australia.
As of July 1, 2016, companies operating with an annual global income of more than AU$1 billion in Australia are required to lodge their general purpose financial statements to the ATO if they are not already doing so with ASIC.
The implementation of those laws by the Australian government was part of recommendations that were made by the Organisation for Economic Cooperation and Development (OECD) from its G20-commissioned base erosion and profit-shifting (BEPS) project.
Under BEPS, the OECD expects governments to be able to retrieve as much as $240 billion in lost revenue each year through dodgy tax practices across the globe, which it claims represents up to 10 percent of global corporate income tax revenues.