Australia - Additional impact of country-by-country reporting 

March 28: 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.

Australian taxpayers are also subject to significant disclosure requirements—such as the “International Dealings Schedule” which may need to be filed with the annual income tax return.

What would be the effect of country-by-country reporting, as proposed in an initial draft template of the Organisation for Economic Cooperation and Development (OECD)?

Country-by-country reporting

The OECD country-by-country draft template would require disclosure of certain indicators of economic activity for each “constituent entity”—e.g., companies, permanent establishments, trusts, and partnerships—of a multinational group in each country in which the multinational group operates, including:

  • 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

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.

The final country-by-country reporting template is expected, under the OECD’s timeframe, for completion in September 2014.

Read a March 2014 report prepared by the KPMG member firm in Australia: Country-by-country reporting to increase compliance burden on multinationals

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