Diverted Profit Tax Submission December 2016.pdf (491 kb)
Greenwoods & Herbert Smith Freehills, and Herbert Smith Freehills, have lodged a joint submission to Treasury on the Diverted Profits Tax (DPT) exposure draft legislation.
Our earlier Riposte contains links to the exposure draft, and our submission in June this year on the DPT discussion paper released with the May Federal Budget.
In our earlier submission, we raised a number of arguments as to why it was not in Australia’s national interest to have a DPT and compared the proposal with the UK DPT, which was claimed as its model. While we remain of that view, it is clear that the Government will be proceeding with the DPT. As a result, our latest submission is targeted at ensuring the draft legislation is refined and clarified, so that it operates in a manner that appropriately balances the Government’s interests, without unduly burdening taxpayers. In particular, we are very concerned that the exposure draft moves further away from the various taxpayer protections and limitations in the UK DPT, and makes the Australian version even more uncertain and draconian for both foreign and Australian multinationals.
Although it appears from discussions with Treasury that in some respects apparent changes from the initial DPT discussion paper were not intended, the fact that such a broad and open-ended exposure draft has been released, raising even more questions and containing less real guidance than the initial paper, adds to the impression that Australia is not welcoming to foreign investment, or to investment overseas by its own multinationals
Partner, Herbert Smith Freehills
Professor Richard Vann
Professor Graeme Cooper