Australian mining tax - domestic transfer pricing rules further modified

Tax Insights ()

There has been no pause in the fierce public debate on Australia’s proposed Minerals Resource Rent Tax (MRRT) since our previous PKNs advising on the release of the first and second Exposure Drafts of the MRRT legislation (PKNs dated 16 June 2011 and 22 September 2011). In those PKNs we highlighted the intended application of transfer pricing principles to isolate an arm’s length ‘upstream’ value of the resource (which is taxed by the MRRT) from value associated with ‘downstream’ activities.

The draft legislation and accompanying explanatory material were finally tabled in Parliament on 2 November 2011. While it remains to be seen if the Government will secure the Parliamentary support it needs to pass this hotly debated legislation (or whether legislation’s passage through Parliament will result in further changes), the version released into Parliament contains some important modifications of interest to PKN readers.