Senate Economics Legislation Committee, , 9:05:54 to 9:15:32
Australia's participation in UN negotiations for a framework convention on international tax and global minimum tax rules.
Topics: Trade policy, International law, Integrity
Speakers: Ian South, Senator Nick McKim, Katrina Di Marco, Unknown Speaker, Senator Lisa Darmanin
Uh thanks very much, Chair. Good evening, folks. Um I'm hoping there's someone who can assist me on uh Treasury's engagement with the UN Convention on International Tax Cooperation.
Senator, I'll ask Mr. South to come to the table. I'll ask Mr. South to come to the table.
Thanks very much. Um my first question is obviously negotiations are underway. Um what's the nature of Australia's engagement with those negotiations? I understand Treasury is the lead agency. Um have we uh made submissions to uh those negotiations and uh what if any other benefits for Australia of securing a strong global tax treaty?
Uh thank you, Senator It's the In South Assistant Secretary International Tax Branch of the Corporate and International Tax Division. Uh you are right, the UN is currently negotiating uh a new framework convention on international tax. Uh this is intended to establish broad principles and arrangements for cooperation on international tax. Uh the negotiations are underway. Uh they are scheduled to run until the end of 2027. Um progress, I think, uh is still ongoing. Um Australia's engagement is continuing. Uh we continue to monitor and participate in those negotiations. Uh we have not yet made a submission. Australia has not made a submission uh to those um negotiations, but we continue to engage on those.
All right, thank you. Um Australia has strong or relatively strong in the international context, uh public country-by-country reporting laws. Um is that something that you might consider um driving or lobbying on during these negotiations? And perhaps as a corollary for that, could I ask you, given that we haven't yet made a submission? Is it our intent to make a submission? And what would the price in and if so, what would the process be around um formulating such a submission?
So we would continue to consider like when and if and when to make a submission based on like the progress of the negotiations and where there is a clear position that the Australian government needs to make to express its its view or to influence like the progress of those negotiations? As I've said, those they are still ongoing and progress, I think has been sort of widely considered to be quite slow. Um in regards to public country by country, well, that's a domestic measure that the government uh announced um as an election commitment and has implemented. Uh it's currently in the process of uh you know its early stages of of implementation and the ATO is working through that. Um at the moment, with uh first lodgements of information being made and that will be published in in due course. Um that's a that's uh transparency measure that I think has got attention from uh a number of other jurisdictions and the EU uh has a similar regime that it is in the process of implementing. So I think there is um uh international interest out there. Um but that has not, to my knowledge, been a matter that has been um part of the negotiations within the within the UN on the on the framework convention.
Okay, thank you. Um under the OACD's inclusive framework on base erosion profit shifting, uh Pillar one seeks to regulate transfer pricing arrangements for multinationals. Um are you aware of any progress that's been made on that through these negotiations? And as a corollary, are you aware of any countries that are actually um Pushing back against any progress.
So the OECD Pillar 1 amount B arrangements deal with transfer pricing. And amount B is an optional measure whereby countries can take simplified approaches to transfer pricing. And as simplified approaches, they're typically opted in by developing countries which have lower capacity, I guess, to engage with complex arrangements that multinationals might engage in in transfer pricing. So that was an agreement and work that has been done under the OECD. So the OECD process is operating, I guess, in parallel and to some extent has overlap with the work that is being done by the UN framework convention. But that work, as I say, is still progressing and in some ways continues to evolve and is still in its early days. So there already is international cooperation on transfer pricing? So I spoke about the amount B work, but that is a very particular part of transfer pricing, I guess, arrangements and international standards. The OECD transfer pricing guidelines have existed for many years in Australia and other jurisdictions have agreed on those and we implement them.
Senator just add a couple of things. Cooperation may or may not benefit us depending on the design is I suppose what I would say.
That and allows those two sets of rules to operate, as the name suggests, side by side. So the US continues to apply its own and its pre-existing minimum tax arrangements where other implementing countries, including Australia, choose to implement the Pillar 2 rules as agreed by the inclusive framework of the government. So Australia's interest is for the be there to be wide adoption of global minimum tax arrangements and the pillar, the side-by-side agreement to the pillar two rules supported the wide implementation of a global minimum tax arrangement. And on that basis we considered that it was in Australia's interest.
Okay. Thank you.
Thank you.
Sorry, can I just add one thing? Senator McKim, you asked in the earlier session about whether we'd received any correspondence from the US on software royalties? Yes. The answer that is confirmed no. We have not yet to date received additional correspondence around software royalties.
I appreciate you coming back in such a timely way.