Australian Federal Budget 2023-24
The Commonwealth Government’s commitment to international taxation reform has been reaffirmed in the Budget, according to global law firm DLA Piper.
“As previously endorsed and as expected, the Government has moved to implement the OECD/G20 led Pillar II solution, incorporating the 15% global minimum tax for large multinational enterprises for income years commencing on or after 1 January, 2024,”
“A competition is emerging globally and regionally (for example with Singapore and Japan) for countries to introduce and apply their respective domestic minimum tax (top-up tax) for effectively low-taxed domestic income. We are watching further progress with great interest as different countries take varied approaches to their domestic minimum tax,” Jock said.
“Expanding Australia’s general anti-avoidance rule (Part IVA) to apply to arrangements designed to access lower withholding tax rates on income paid to foreign residents will be closely watched as Australia progresses a significant expansion of its Double Tax Treaty network, including with countries like Portugal, Greece and Luxembourg. Dividends, interest and royalty withholding tax rates often vary between 0%, 5%, 10%, 15% or 30%, depending on the treaty eligibility or no treaty eligibility,” he added.
Jock said the budget also contained a significant policy change for the build-to-rent sector.
the Managed Investment Trust withholding tax rate from 30% to 15% for eligible new build-to-rent projects will make the sector more feasible. The build-to-rent sector in Australia, which has lagged other jurisdictions for some time, will no doubt welcome this policy change,” he said.