The connection of MAAL revolves

Running head: TAXATION LAW
Taxation Law
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TAXATION LAW1
Executive Summary:
The present report is based on understanding the rules associated to anti avoidance of tax by the
multinational companies. The report will primarily create an emphasis on the intention of
Multinational anti-avoidance legislation and the manner in which it is designed to operate. The report
will also be examining the mechanism and the aims of Diverted Tax Profits (DPT) and also discusses
regarding its success or failure in the Australian taxation law. The report will be analysing the main
objectives and the scope involved in the CbC reporting and the reasons why it has been adopted in
Australia.

TAXATION LAW2
Table of Contents
Introduction:..........................................................................................................................................3
Intent of MAAL legislation:..................................................................................................................3
Central constituents of MAAL:.............................................................................................................3
Significant global entities:.....................................................................................................................4
Application of the MAAL:....................................................................................................................4
Aims and mechanics of Diverted Profit Tax:.........................................................................................5
Discussion of its success:......................................................................................................................6
Objectives and scope of CbC reporting and its reasons for adoption:....................................................7
Conclusion:............................................................................................................................................7
References:............................................................................................................................................8

TAXATION LAW3
Introduction:
The connection of MAAL revolves around “Pt IVA of the ITAA 1936” and the newly
introduced “sec 177D”. As per this section two practical perceptions of the MAAL that brighten up is
the provision of subsequent penalty and administrative powers that are stated under the “Pt IVA” and
the “Tax Administration Act 1953”. If the taxpayer is in breach of MAAL, the commissioner has the
control of cancelling the estimated “tax benefit” which will be invigorated within the “ITAA 1936”
(Berg and Davidson 2015). The corporate tax rate of 30% will be implemented and the fines of
around 120% to evaluate the “tax benefit” might be implemented within “TAA 1953”.
The MAAL is created to give permission to ATO to implement the new provision in order to
make sure that “large-scale multinational tax avoidance” does not affect the truthfulness of the
global and national tax system by corroding the base of tax. It is thought that MAAL will stop
international business that trade with customers of Australia by using artificial arrangements for
booking revenue offshore. Unlike the MAAL the DPT provision also has the objective of promoting
the significant global companies to lay down adequate information to commissioner and allowing on
time resolution of disputes.
Intent of MAAL legislation:
The main objective of MAAL provisions is to apply the principle purpose test where an
individual has entered in the scheme with the principle objective or for greater than one principal
objective of getting “tax benefit” and to lower or defer one or greater than one taxpayer’s liabilities to
impose tax under the overseas law that are connected with the system. The “Multinational anti-
avoidance law” (MAAL) is regarded as the addition of “Australia’s general anti-avoidance” rules
(Waerzeggers and Hillier 2016). This law makes sure that international companies pay their
reasonable amount of duty on the incomes that is earned from Australia. The MAAL counters the
wearing down of “Australian tax base” by the international business by utilizing false and affected
engagements in order to evade distribution of profits to the “permanent establishment” in Australia.
The law is applicable on the certain benefits that is derived on or following the 1st January
2016. It is widely applicable on the significant global companies (Merlo, Riedel and Wasmer 2014).
A significant global companies is a separate or “accounting consolidated” parent corporation that has
yearly world-wide earnings of A$1 billion or more.
Central constituents of MAAL:
The MAAL has numerous constituents’ elements:
a. The concept of significant global entities (SGE)
b. Making of supplies to unrelated Australian consumers