Andrew Leigh (Fenner, Australian Labor Party, Assistant Minister for Competition, Charities and Treasury) Share this | Hansard source

First, I'd like to thank all members who have contributed to the debate. Together this package of bills will enact a 15 per cent global minimum tax and domestic minimum tax for multinational enterprises operating in Australia with an annual global revenue of 750 million euros—which is approximately A$1.2 billion—or greater. These bills, upon receiving royal assent, will apply to fiscal years commencing on or after 1 January 2024. Large multinational enterprises with operations in Australia may therefore face a top-up tax liability under these taxes from this date if their effective tax rate is less than 15 per cent.

These bills represent a landmark achievement in the international tax landscape and follow on from the government's 2023-24 budget announcement that we would implement global and domestic minimum taxes for large multinational enterprises. Their introduction also marks further progress on the government's election commitment to support pillar 2 of the OECD/G20 two-pillar solution to addressing the tax challenges arising from the digitalisation of the economy. It also builds on the government's Multinational Tax Integrity Package to help ensure multinational enterprises pay their fair share of tax.

Not only does this legislation place Australia alongside other lead jurisdictions, as part of a global effort to prevent a race to the bottom on corporate tax rates, but it also offers Australia some important domestic benefits. Putting a floor on corporate income tax rates will reduce the incentive for multinational enterprises to shift profits away from Australia to low-tax jurisdictions. This will in turn improve the competitiveness of smaller domestic businesses by reducing such tax advantages available to multinational enterprises. Avoiding a race to the bottom on corporate taxes will also support investment in Australia, given our relatively high headline corporate tax rate and the relatively large share of revenue that Australia draws from corporate taxation.

Importantly, implementing these taxes, especially a domestic minimum tax, and having the package of bills apply from 1 January 2024 will ensure that Australia retains first claim to additional taxing rights on any low-tax domestic income, thereby protecting our revenue base. It is important to note, though, that the first global and domestic minimum tax returns will not be due until 30 June 2026, giving multinational enterprises time to adapt their compliance and reporting systems.

Finally, these bills will not affect Australia's existing corporate income tax rate or rules, nor Australia's existing taxation integrity measures, all of which will continue to apply to multinational enterprises operating in Australia, ensuring the integrity of our tax system.

In closing, I want to acknowledge the many officials that have worked on this extremely complicated package of reforms: in the International Tax Branch—Kerry Baguley, William Potts, Henry Addison, Lilian Yan, Mackenzie Brown, Brian McKay and Mingliang Sun; from Law Division—Tania Koit, Monica Lee, Maddison Bell, Jodic Chan, Kelly Minerds, Ron Harry, Diana Batchelor, Rumbie Mawrie, Istiak Ahmed and Janelle Hanns; from the Office of Parliamentary Counsel—Daniel Lovric, Matthew Sait, Eric Armstrong and Jonathan Phua; and from the Australian Taxation Office—Adam Peel, Touqir Ali, Adam Reed, Alexandra McCallum, Angus Brackenreg, Brendan Wagner, Bruce Matheson, Caroline Arman, Katina Gregory, Lakshinee Kodituwakku, Louise Andolfatto, Marcus Wong, Melissa Papazzo, Michael Sapuppo, Michael Wang, Nola Bi, Paul Skellett, Rhys Manley, Simon Hellmers and Tim Smith. I commend these bills to the House.

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