The Business Council of Australia (BCA) welcomes the opportunity to make this submission to the Senate Standing Committee on Economics inquiry into the government amendments to Treasury Laws Amendment (Making Multinationals Pay Their Fair Share-Integrity and Transparency) Bill 2023.

The BCA maintains that all companies must meet their tax obligations and where arrangements do not keep pace with community norms, they should be reviewed. Robust tax integrity and transparency measures are an integral complement to more competitive business tax arrangements.

The BCA welcomes the continued consultation on the amendments and supports the overall objective that the proposed amendments "balance the tax integrity policy intent while continuing to support genuine commercial activity and being mindful of compliance costs.

The BCA supports the government's intent that measures be balanced against the need to attract and retain foreign capital and investment in Australia, limit potential additional compliance cost considerations for business, and continue to support genuine commercial activity. A continued consultation process that follows best practice principles is critical.3 Further consultation through this Senate inquiry is particularly welcome given the extensive amendments contained in the latest iteration of this legislation and the complexity of the issues raised.

The proposed amendments are an improvement on previous iterations of the bill, which serves to further underscore the importance of effective government consultation with stakeholders and parliamentary scrutiny. However, the proposed amendments raise a number of issues in relation to the debt deduction creation rule (DDCR) that can be addressed in ways that maintain tax integrity while better aligning the Australian tax system with international best practice and without a significant cost to the budget. The BCA is supportive of the specific drafting amendments recommended by the Corporate Tax Association in its submission to the Committee dated 22 December 2023.

The Australian economy is heavily reliant on trade and foreign investment. Changes to the tax system should be mindful of unnecessarily increasing uncertainty, complexity and compliance costs or making it more difficult to attract and retain investment in Australia. Both inbound and outbound investment is potentially adversely affected by the proposed amendments. This comes at a time when Australia is experiencing net outflows of foreign direct investment on an annual basis.

You can read our full submission here.