Address the tax challenges arising from digitalisation of the economy.
The Government will implement key aspects of Pillar Two of the OECD/G20 Two-Pillar Solution to address the tax challenges arising from digitalisation of the economy: i) A 15 per cent global minimum tax for large multinational enterprises with the Income Inclusion Rule applying to income years starting on or after 1 January 2024 and the Undertaxed Profits Rule applying to income years starting on or after 1 January 2025. ii) A 15 per cent domestic minimum tax applying to income years starting on or after 1 January 2024. The global minimum tax and domestic minimum tax will be based on the OECD Global Anti-Base Erosion Model Rules, which are designed to ensure large multinationals pay an effective minimum level of tax on the income arising in each jurisdiction where they operate. A global minimum corporate tax rate of 15 per cent prevents a 'race to the bottom' on corporate tax rates, and protects our corporate tax base. The global minimum tax rules would allow Australia to apply a top up tax on a resident multinational parent or subsidiary company where the group's income is taxed below 15 per cent overseas. A domestic minimum tax would give Australia first claim on top-up tax for any low-taxed domestic income. In a small number of instances, a large multinational company's effective Australian tax rate may fall below 15 per cent. In these instances, the domestic minimum Treasury | tax applies so that Australia collects the revenue that would otherwise have been collected by another country's global minimum tax. The global minimum tax and domestic minimum tax will apply to large multinationals with annual global revenue of EUR750 million (approximately $1.2 billion) or more. This measure is estimated to increase receipts by $370.0 million and increase payments by $111.0 million over the 5 years from 2022-23. This measure progresses the Government's election commitment as published in the Plan for a Better Future.