Country by Country reporting, the new ATO regime effecting global business

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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
These statements are due 12 months after the end of the income period.

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
Should you wish to find out more or you think you are effected by the new Local File requirements please feel free to contact our expert team in Australia for further advice.
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About Author

Kelly Morgan
Kelly Morgan

Kelly Morgan has over 32 years’ experience as a Chartered Accountant and is the Managing Partner of Azure Group heading up the Business Accounting, Technology & International divisions. Kelly is passionate about working with business owners. By working closely with her clients, Kelly helps them to maximise the opportunities in their business and assist them to achieve their goals.

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