Foreign investment is important, but it must work in Australia’s national interest. The impact of tax risks in foreign investment proposals on Australian tax revenue is a key consideration of the national interest test.

The government is increasing scrutiny of tax arrangements which pose a risk to revenue to ensure that multinational companies are adhering to Australia’s taxation laws. The government’s approach to tax risk reflects the international trend to ensure that entities pay the right amount of tax in the countries in which they operate and where value creation occurs.

Additional scrutiny, and tax conditions where necessary, will be applied to foreign investment proposals with certain tax risk characteristics particularly those assessed as medium or high risk.

If a foreign investment proposal is approved, it may be approved subject to certain conditions, including tax conditions.

A set of guiding principles have been established to aid in the development of any condition(s). See the Principles for Developing Conditions Guidance Note.

The government will take appropriate and proportionate action to mitigate identified tax risks through the use of tax conditions:

The Treasurer will impose tax conditions to an investment where they are considered necessary to protect the national interest. This will be done on a case‑by‑case basis and may be tailored to significant or particular tax risks.

Maintaining strong compliance with Australia’s foreign investment legislation is a priority for the Government. Failure to comply with Australia’s foreign investment legislation – including tax conditions – can result in significant penalties, including enforceable undertakings, direction orders, infringement notices, civil and criminal penalties.