The 'Google tax' starts next January and Joe Hockey wants to make it global

Photo: Getty / Justin Sullivan

Australia is creating to new laws against multi-national companies which aggressively minimise their local tax obligations by shifting income to low tax countries.

Thirty companies are in the frame but Treasurer Joe Hockey, who tabled the draft bill in parliament tonight as part of the budget, won’t name them nor say how much revenue is at stake.

The legislation amends the anti-avoidance provisions in the Income Tax Assessment Act 1936 (ITAA 1936) to introduce the multinational anti-avoidance law.

“We simply want people or companies who are avoiding their tax to pay their fair share,” Hockey told parliament.

“Everyday Australians rightly believe that if a dollar of profit is earned here, then you should pay tax here. Unfortunately this is not always the case for some multinationals. Many have the capacity to aggressively minimise their tax.”

Hockey says the new Multinational Anti Avoidance Law will stop multinationals using complex schemes to escape paying tax.

“Under this new law, when we catch companies cheating, they will have to pay back double what they owe, plus interest,” Hockey says.

According to a briefing paper on the legislation some multinational entities engage in deliberate tax avoidance, exploiting legal loopholes to pay less tax than the law intended.

Australia is also working with the G20 countries on a project aimed at restoring fairness in the international tax system and ensure that entities pay tax where they have earned their profits.

The Government is taking action on multinational entities that exploit loopholes and artificially structure to avoid paying tax in Australia or elsewhere in the world. This is contrary to the intention of international agreements.

The Australian Tax Office has embedded staff in a range of multinationals, including Google and Apple, gathering information. The new law is due to start January 2016.

“This is only the beginning,” according to the budget papers.

“The Government will commence consultations with the community on whether further amendments are required to Australian law, consistent with the work being carried out by the G20 and OECD, to address other profit shifting strategies used by multinationals to avoid paying tax in Australia on economic activities performed in Australia.”

More Budget Coverage:

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.