A panel of independent experts should be given responsibility for overseeing the application of the Diverted Profits Tax to prevent misuse of the “harsh” measure by the Australian Tax Office, the mining sector says.
New laws due to come into force on July 1 will give the ATO additional powers to go after multinationals that it suspects are diverting profits offshore and therefore minimising how much tax they pay in Australia.
If the ATO determines that the DPT applies, income tax will be payable on the amount of the “diverted profit” at a rate of 40 per cent. The company accused of avoiding tax must pay the final DPT assessment within 21 days and has no right of appeal until later in the process.
The Minerals Council of Australia, which represents mining companies including BHP, Rio Tinto and Glencore, said the serious and punitive nature of DPT meant there should be some independent oversight to ensure there is no “misuse” by the ATO.
“We recommend that before the ATO can issue a DPT assessment, it must satisfy an independent panel of taxation experts that the arrangement is worthy of being subject to the harsh punitive treatment,” the council said in a submission provided to The Australian Financial Review.
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