German-Aust tax deal eyes multinationals 

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The Abbott Government is seeking to “tighten” international tax laws, targeting multinational profit shifting and tax base erosion, after starting bilateral tax negotiations with Germany.

Treasurer Joe Hockey and Finance Minister Mathias Cormann said today the government was starting formal negotiations with Germany on a new double taxation agreement.

The current agreement, which was signed in 1972, needed updating reflecting the changing nature of the economy since then, the ministers said in a statement today.

Mr Hockey and Mr Cormann said discussions would focus on minimising double taxation. The talks would also seek to “tighten the rules” to address base erosion and profit-shifting to “ensure multinationals pay their fair share of tax”, in line with the objectives of the the OECD and the aims of the G20.

The re-negotiation of the agreement was labelled a priority by Prime Minister Tony Abbott and Chancellor Angela Merkel during their meeting in Sydney after the G20 summit.

Germany is Australia’s tenth largest trading partner, with $16 billion of trade moving between the two countries.

“It is vital that we have a modern tax treaty that supports this important relationship,” the ministers’ statement said.

Source: The Australian – German-Aust tax deal eyes multinationals

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