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MAAL Under the Microscope: Australia’s Multinational Anti-Avoidance Law

As we welcome 2016, transfer pricing remains in the eye of the Australian Taxation Office (ATO) with further developments on the enforcement of Australia’s multinational anti-avoidance law (MAAL). Likewise, transfer pricing remains in the headlines of newspapers. Both The Age and the Financial Review have featured articles about the MAAL[1]. The spotlight on the anti-avoidance law affirms Australia’s commitment to enforcing tax transparency and the implementation of BEPS Action plan.

On 12 January 2016, the ATO released the ‘MAAL Client Experience Roadmap’. The roadmap outlines the ATO’s views on the engagement process, legacy issues, penalties and settlements for taxpayers that potentially are subject to the MAAL. The MAAL was passed as law on 3 December 2015 and applies to income on or after 1 January 2016. For further information about the MAAL please read our December newsletter in the following link new-legislation-introduces-new-transfer-pricing-documentation-standards-and-other-anti-avoidance-measures/

The ATO has stated that it will allocate multinational groups that fall within the scope of the MAAL, into categories that will be subject to different enforcement processes and penalties. The ATO has divided taxpayers into the following five categories:

Category A: Under an existing review or audit
Category B: Approached by the ATO
Category C: Voluntary disclosure before 31 March 2016
Category D: Subsequently identified
Category E: Outside the scope of the MAAL

The ATO already has started sending letters to multinationals potentially falling within the scope of the MAAL (mainly “Category A” multinationals). The letters advise taxpayers to consider their MAAL position and to expect further contact from the ATO in early 2016. Similar letters will be sent to other multinationals by 31 March 2016, based on risk profiling carried out by the ATO.

Practical implications

  • Multinationals that may fall within the scope of the MAAL, should perform a risk assessment and, if necessary, evaluate options for engaging with the ATO, regardless of whether they have received a letter from the ATO.
  • Multinationals potentially within the scope of the MAAL and not contacted by the ATO before 31 March 2016, should decide whether to initiate voluntary engagement with the ATO or to forgo the potential benefits of early engagement (e.g. reduced penalties should they apply).

For more information about new measures and how the MAAL may affect your company please contact Transfer Pricing Solutions on +61 3 5911 7001 or admin@transferpricingsolutions.com.au.  

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