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Treasury Consultation Paper, Implementing a Diverted Profits Tax

The Taxation Committee of the Business Law Section of the Law Council of Australia (Committee) welcomes the opportunity to provide its submission on the Treasury Consultation Paper entitled Implementing a Diverted Profits Tax (Consultation Paper). 

As set out in the Consultation Paper, the diverted profits tax (DPT) will be based on the second limb of UK's DPT and will target arrangements that large multinational corporate taxpayers have with a related party where the transaction gives rise to an effective tax mismatch, and has insufficient economic substance. 

The Committee considers that the introduction of DPT in Australia raises a number of issues. This letter contains our general observations on the new tax, and specific comments on the following technical and administrative aspects of the tax: 

a) Effective tax mismatch condition; 

b) Insufficient economic substance requirement; 

c) Calculation of the assessment; 

d) Income tax treatment of a DPT liability; and 

e) Administrative process and timeframes. 

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