Australia will pursue a multilateral solution to the tax challenges presented by the digital economy and will not implement a digital services tax at this time. The decision was announced by Treasurer Josh Frydenberg in a press release on Wednesday.

This is after the 2018 Treasury consultation that sought views on the suitability of Australia’s corporate tax system in the age of the digital economy. The department received 44 submissions.

‘Given this feedback and recent international developments, the Government has decided to continue to focus our efforts on engaging in a multilateral process and not to proceed with an interim measure, such as a digital services tax, at this time,’ Mr Frydenberg said in the statement.

He mentioned Australia is actively engaged on digital taxation with other countries, through the G20 and the Organisation for Economic Co-operation and Development (OECD).

The OECD recently released a public consultation document on possible solutions to the tax challenges arising from the digitalisation of the economy. In response, the OECD received over 200 written submissions.

“Australia will join other members of the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS) in May to discuss responses to the consultation document and progress towards a final report due in 2020 aimed at providing a consensus-based multilateral solution to the tax challenges presented by the digitalisation of the economy,” Mr Frydenberg said.

The Treasurer reaffirmed Australia’s commitment in strengthening its tax rules and ensuring digital companies pay adequate taxes.

“The Government firmly believes that digital firms, like all firms, must pay their fair share of tax.”

 

Treasurer’s media release

Submissions: The Digital Economy and Australia’s Corporate Tax System

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