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The Australian government is introducing new legislation this week to crack down on tax avoidance schemes commonly practiced by multinational corporations doing business in Australia. The new legislation is expected to go into effect in 2016 and is expected to hit companies such as Apple, Google, Microsoft, and Starbucks.

The new legislation has two major elements:

1. Elimination of tax avoidance schemes among at least the top 30 global multinational companies doing business in Australia by requiring the companies to stop diverting profits through "contrived or artificial tax arrangements," usually involving corporate structures based in Singapore. Penalties for noncompliance would rise to 100% of the tax owed plus interest.

2. Extension of Australia's 10% Goods and Services Tax (GST) to imported digital products such as Netflix subscriptions, Apple iTunes and App Store purchases, and Google Play Store purchases.

Australia's Treasurer Joe Hockey describes the new multinational tax avoidance law as “the first of its kind in the world," even stronger than new legislation in the United Kingdom. Details will be released when the government introduces its new budget, however the Abbott government is not yet predicting how much additional tax revenue the crackdown will raise.
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