International taxation – global and domestic minimum tax – subordinate legislation
The Tax Institute welcomes the opportunity to make a submission to the Treasury in respect of its consultation on the exposure draft Taxation (Multinational – Global and Domestic Minimum Tax) Rules 2024 (draft Regulations) and accompanying explanatory statement (draft ES). In the development of this submission, we have closely consulted with members of The Tax Institute with expertise in the area, including our National Large Business and International Technical Committee, and our Pillar Two Working Group, to prepare a considered response that represents the views of the broader membership of The Tax Institute. The draft Regulations contain the bulk of the detail of the implementation of the Organisation for Economic Co-operation and Development’s (OECD’s) Inclusive Framework and Global Anti-Base Erosion Model Rules (Model Rules). This is a complex and lengthy regime that will impose significant burdens on taxpayers, tax advisers and tax administrators. The Tax Institute is of the view that further clarification and guidance is needed on the draft Regulations and draft ES regarding:
- the application of the acquisition rules to single entity acquisitions;
- interactions with regimes specific to Australia’s tax system;
- the application of the pension rules to defined benefit funds;
- the enactment dates of the draft Regulations and primary legislation; and
- whether the latest OECD commentary and agreed administrative guidance has been incorporated into the draft Regulations. We also consider it important to ensure that a contemporaneous post-implementation review is undertaken to address the complexities and unintended consequences that are likely to arise from Australia’s adoption of the Model Rules.
Our detailed response and recommendations to further improve the draft Regulations and draft ES are contained in Appendix A. The Tax Institute is the leading forum for the tax community in Australia. We are committed to shaping the future of the tax profession and the continuous improvement of the tax system for the benefit of all. In this regard, The Tax Institute seeks to influence tax and revenue policy at the highest level with a view to achieving a better Australian tax system for all.