Below is an overview of the new Country-by-Country (CbC) reporting requirements that have come into effect as part of the OECD’s BEPS Action Plan.
In working with our existing clients we have come to understand that this is not something widely known and head offices around the world are just starting to understand the intricacies of this new regime.
Overview
The CbC reporting regime impacts “significant global entities” whose annual global income is greater than $1 billion. This also includes subsidiaries of consolidated groups where the group’s annual global income is at least $1 billion.
For income years commencing 1 January 2016 these entities may be required to lodge the following documents with the Australian Tax Office (“ATO”):
- Master File which provides an overview of the multinational group business, operations, transfer pricing policies and allocation of income
- Local File which focuses on specific transactions between the reporting entity and its transactions with other countries
- CbC Report which contains information relating to the economic activity in each country
As a minimum each entity must prepare the “Local File”, but we understand that the Australian entity can apply to the ATO for an exemption from having to prepare a “Master File” and “CbC Report” where these have been lodged by the ultimate parent company with a jurisdiction in one the 35 OECD countries.
If applying for an exemption, the ATO has provided the below brief on what requirements need to be met in order to be exempted.
Information you will need to include in exemption request
You should set out the facts and circumstances relevant to your CbC reporting obligations, including:
- the statements from which you seek exemption (i.e. one or more of the CbC report, master file and local file)
- the reporting period(s) for which you seek exemption
- the name(s) and, where applicable, TFN(s) or ABN(s) of the entity or entities for which you seek an exemption
- the entity type (for example, company, partnership or trust) and tax residence of the entity for which you seek an exemption
- the name of your global parent entity, the country in which it is a tax resident and, if known, its taxpayer identification number in that country
- your reasons for seeking an exemption
- any documents supporting your request
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