Australia’s presidency of the G20 will see the tabling of a new Organisation for Economic Co-operation and Development (OECD) standard for the 'Automatic Exchange of Financial Account Information'. Inspired by the Foreign Account Tax Compliance Act (FATCA) in the US, the vision is that bank account information will soon be conveyed automatically to the relevant tax authorities. Will the existing reporting systems of Financial Institutions be enough to comply?
The Australian Taxation Office (ATO) is already benefiting from an increase in access to financial information following the successful conclusion of Tax Information Exchange Agreements with a number of key low tax jurisdictions in recent years. The ATO is also privy to a wealth of information from local, state and federal regulatory bodies. The data matching and analytics opportunities now at the authorities’ fingertips are staggering.
Taxpayers used to working on their tax affairs on a jurisdictional basis can look forward to a more holistic approach to their global tax affairs. The time is already here to participate in the debate on what global tax administration of global business should look like, and the direction is clear. The OECD recently issued a discussion draft in relation to Action item 13 of the Action Plan on Base Erosion and Profit Shifting (BEPS). It includes proposals for a global tax transfer pricing master file, and country-by-country reporting of revenues, profits, personnel and other key attributes. Consultation on this paper is taking place within a short timeframe, and closes on 23 February 2014.
The combination of the Global Transparency and BEPS initiatives and real time compliance initiatives at home is directed to forcing global organisations to reassess their tax risk appetite by reference to both reputational and financial risk, with detection by Tax Revenue Authorities a given.