Australia is also actively involved in the OECD’s Pillar One and Pillar Two initiatives, which are designed to meet the 2023 implementation deadline for the so-called two–pillar solution, including the aim to finalize a multilateral convention to implement Pillar One by July 2022.
Australia is also actively developing rules to establish a patent box regime for medical and biotechnology innovations, lowering the tax on related income to 17 percent from July 2022.
This should encourage the development and exploitation in Australia of those innovations supported by Australian research funding. The government announced in March 2022 an extension of this patent box regime to some low emissions technology, agricultural products, and plant breeder’s rights.
Taxpayers and asset holders may be interested in how the regime considers the development, exploitation, management, protection, and enhancement of Australian intangibles.
Australia’s transfer pricing approach is broadly consistent with the OECD transfer pricing guidelines. It has adopted legislative changes which are consistent with the guidelines and the authority to deal with non-compliance. Australia has been willing to litigate transfer pricing disputes.
Overall, Australia has a well-developed and coordinated approach to managing its transfer pricing–risk landscape, allowing compliance resources to be directed at the most important transfer pricing risks.