The digital economy and Australia’s corporate tax system

The Government is working with other countries, through the G20 and the OECD, to develop sustainable, multilateral responses to address the challenges to our tax system arising from digitalisation. A discussion paper was issued by Treasury for comment by 30 November 2018 to explore options to move towards a fairer and more sustainable tax system for the digitalised economy.

E-commerce and digital economy outcomes for the Tax Avoidance Taskforce

The rapidly evolving nature of the e-commerce and digital economy industry has significantly transformed the way multinational enterprises conduct their operations. This has resulted in complex arrangements being used as well as new, emerging business models. Consequently, highly complex and often unique business and financial structures are used by these enterprises, usually aiming to minimise tax obligations.

As a result of the proliferation of these artificial structures aimed at tax minimisation, this industry was chosen by the ATO as a focus area in the ATO’s ongoing efforts to ensure an even playing field for all taxpayers.

As part of the work undertaken by the Tax Avoidance Taskforce, the ATO has done substantial compliance work focusing on the e-commerce and digital economy industry.

Multinational enterprises operating in this industry have significantly increased the profits declared and the tax they pay in Australia as result of the ATO’s efforts. The playing field is starting to level out.

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