Implementing the Multilateral Instrument in Australia

Australia was an active participant in the development of the Multilateral Instrument (MLI) and, on 7 June 2017, was one of the initial group of 76 jurisdictions to sign or indicate an intention to sign. Australia views its adoption of the MLI as part of a suite of actions taken to address base erosion and profit shifting. Unilateral measures had previously included the introduction of a Multinational Anti-Avoidance Law (MAAL) in 2015 and a Diverted Profits Tax in 2017. Australia saw the adoption of the MLI as a way to build on domestic integrity rules ‘to strengthen the international tax system and level the playing field for domestic businesses.’ Australia’s legal system requires that treaty texts be enacted as domestic law by the Federal Parliament in order to take effect. Mandatory consideration of proposed treaty adoption by the federal Parliament’s Joint Standing Committee on Treaties is also required prior to enactment of such a law. The Joint Standing Committee approved adoption of the MLI in November 2017, noting that it ‘supports this important step in ensuring every entity meets in tax obligations’, though expressing the hope that the Government would implement the MLI in a way that did not result in undue compliance costs in view of its complexity.