Global

Details

  • Service: Tax, Global Transfer Pricing Services, International Tax
  • Type: Regulatory update
  • Date: 2/10/2014

Australia - Effects of documentation, country-by-country reporting for Australian taxpayers 

February 10:  Australian taxpayers are already subject to extensive transfer pricing recordkeeping rules, following last year’s passage of Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Act 2013, and also may be subject to significant disclosure requirements such as the International Dealings Schedule.

Against this background, the OECD’s discussion draft on transfer pricing documentation and country-by-country reporting (released 30 January 2014) contains recommendations on the issue of materiality affecting the compliance obligations of taxpayers, yet also contemplates much more detailed disclosures of a taxpayer’s international structure and business affairs.


A key compliance-related issue is how documentation-related penalties would be imposed when a multinational company does not complete a country-by-country reporting template. It could be inferred that such penalties would be imposed, given the country-by-country reporting template forms part of the master file.


Also, on the compliance front, the Australian Taxation Office (ATO) has already begun asking taxpayers to provide it with much of the information that would be included in the country-by-country reporting template. For example, in late 2013, the ATO commenced its international structuring and profit shifting (ISAPS) field review program, which focuses on both corporate tax and transfer pricing aspects of complex and high-value, cross-border transactions. This includes financing transactions, intangible property transactions, and corporate restructuring transactions.


The ATO is expected to send review notification letters to approximately 125 taxpayers, requesting detailed international data and as well as a presentation to be made to the ATO. The reviews are expected to take six to nine months, resulting in a risk rating or escalation to audit.


A key issue associated with these taxpayer reviews is the ATO’s desire to review information associated with the overseas aspects of taxpayers’ global structures, so that the ATO can understand the broader context of taxpayer transactions and operations. This review would concern details of global corporate value chains—including sales, profits, and tax paid for each jurisdiction in which the group operates; payments to and from low tax jurisdictions; e-commerce; and tax risk governance.


Read a February 2014 report [PDF 127 KB] prepared by the KPMG member firm in Australia: Transfer Pricing Update: OECD Discussion Draft



Contact a tax professional with KPMG's Global Transfer Pricing Services.




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

 

Share this

Share this

Subscribe

Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)


Already a Subscriber? Login


Not a member? Subscribe now