Labor wants to deny multinationals a tax deduction for royalties when they are paid by a firm with $1 billion or more of global turnover to a related party overseas.
The aim is to vet investments from countries that fail to comply with international standards, Mr Bowen said.Mr Leigh argued the Federal Government's Diverted Profits Tax had not been effective on the royalties issue, and Labor would deny multinationals a tax deduction for questionable royalties paid to a related party overseas by a firm with $1 billion or more of global turnover.
The PBO estimate, based on Labor's specifications, assumes that related party money is not being taxed correctly or fairly, because the overseas jurisdiction where the money is being sent — often the low-tax nation of Singapore — is not taxing as high as it could. Mr Robert said the Federal Government had been a key player at the G20 and the OECD on setting rules to combat multinational tax avoidance.
Australia could be one of the world's earliest movers in introducing an interim tax on digital companies. In 2015, Uber told a Senate corporate tax avoidance inquiry that about 25 per cent of each transaction in Australia was routed to its head company in the Netherlands. The tech giants' sales have also soared, but tougher anti-avoidance laws have not been able to stop the legal practice of advertising revenue getting channelled via low-tax countries like Singapore.
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