Australia

Details

  • Service: Tax, Global Transfer Pricing Services
  • Type: Regulatory update
  • Date: 28/03/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Damian Preshaw

Damian Preshaw

Director, Tax

+61 3 9288 5658

dpreshaw@kpmg.com.au

Country-by-country reporting to increase compliance burden on multinationals 

by Damian Preshaw, Global Transfer Pricing Services Specialist

The issues of tax morality and tax transparency have become debates in the public forum and continue to captivate the attention of governments, tax authorities and company executives and directors. One of the recent developments in this context is the Organisation for Economic Cooperation and Development (OECD’s) initial draft template to give effect to country-by-country reporting.

The country-by-country draft template requires disclosure of certain indicators of economic activity for each ‘constituent entity’ of the multinational group in each country in which the multinational group operates as follows (a ‘constituent entity’ includes companies, permanent establishments, trusts and partnerships):

 

  • place of effective management
  • business activity
  • revenue
  • earnings before tax
  • income taxes paid to country of organisation
  • income taxes paid to all other countries
  • withholding taxes paid
  • stated capital and accumulated earnings
  • number of employees
  • total employee expenses
  • tangible assets
  • intercompany payments/receipts of royalties, interest, and service fees

 
Australian taxpayers are already subject to extensive transfer pricing record-keeping rules following last year’s passage of Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013 and are also subject to significant disclosure requirements such as the International Dealings Schedule which may need to be lodged with the annual income tax return.

 

If finalised in its current form, the OECD’s country-by-country reporting template could result in significantly increased disclosure requirements and compliance costs for multinational companies. Companies won’t have to wait long for the final country-by-country reporting template as the OECD’s timeframe for completion is September 2014. Stay tuned!

 

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