The Albanese Labor Government has passed significant legislation implementing a global minimum tax, marking a major milestone in Australia's engagement with international tax reform. The new laws, which took effect from 1 January 2024, ensure large multinational enterprises pay a minimum 15% tax rate.

The legislation includes both a global minimum tax and a domestic minimum tax, operating together to protect Australia's corporate tax base. The domestic minimum tax ensures Australia has first claim on any top-up tax for low-taxed domestic income, rather than allowing this revenue to be collected by other countries.

This reform is part of the OECD/G20 Two-Pillar Solution, placing Australia among the lead jurisdictions working to improve the international tax system. The changes help prevent a 'race to the bottom' on corporate tax rates while creating a more level playing field between multinational and domestic businesses.

• Applies to multinational enterprises with annual global revenue of €750 million or more

• Implements 15% minimum effective tax rate

• Income Inclusion Rule effective from 1 January 2024

• Undertaxed Profits Rule effective from 1 January 2025

• Requires new tax returns including Global anti-Base Erosion (GloBE) Information Return

  
  

[1] https://treasury.gov.au/sites/default/files/2019-03/Document1-4.pdf

[2] https://ministers.treasury.gov.au/ministers/andrew-leigh-2022/media-releases/closing-door-multinational-tax-avoidance

[3] https://oia.pmc.gov.au/sites/default/files/posts/2023/05/Two-Pillar%20Solution%20-%20Addressing%20the%20Tax%20Challenges%20Arising%20from%20the%20Digitalisation%20of%20the%20Economy%20IA.pdf

[4] https://globaltaxnews.ey.com/news/2024-2188-australia-passes-legislation-to-implement-global-and-domestic-minimum-tax

[5] https://www.ato.gov.au/about-ato/new-legislation/in-detail/international/implementation-of-a-global-minimum-tax-and-a-domestic-minimum-tax