April 12, 2023
Australian Treasury releases Exposure Draft Bill — Multinational tax transparency public country-by-country reporting
The Australian Treasury has released Exposure Draft (ED) legislation and Explanatory Materials (EM) for consultation that includes a proposal requiring certain large multinational enterprises to publish specified tax information on a country-by-country (CbC) basis.
The proposed measure forms part of the Government's Multinational Tax Integrity and Tax Transparency package (see Global Tax Alert, Australian Treasury releases Discussion Paper on new thin cap rules, royalty deduction rules and public tax disclosure rules, dated 5 August 2022) and follows the recent release of ED law for the transparency measure requiring Australian public companies to disclose the number of subsidiaries and their country of tax domicile (see Global Tax Alert, Australian Treasury releases Exposure Draft Bills on thin cap changes and tax transparency disclosure of information, dated 17 March 2023). The Government is still to release ED law for its remaining tax transparency measure, which requires tenderers for Australian Government contracts worth more than $200,000 to disclose their country of tax domicile.
The proposed amendments apply to a CbC reporting parent (applying the current law definition — i.e., certain entities that are not controlled by another CbC reporting group entity, with annual global income of $1billion or more) that meets all of the following criteria:
Where the rules apply, the CbC reporting entity will be required to publish selected tax information on an Australian government website in an approved form and the Commissioner of Taxation will facilitate publication. Penalties will apply for noncompliance.
The CbC reporting parent is required to publish the names of each entity in the CbC reporting group and a description of the group's approach to tax.
For each jurisdiction in which the CbC reporting group operates, the CbC reporting parent must also publish, at a group level:
The Commissioner may exempt some entities from providing particular information.
The selected tax information must be published within 12 months after the end of the income year to which it relates, although the Commissioner may, by written notice, approve an alternative 12-month period.
The amendments are proposed to apply to reporting obligations for income years commencing on or after 1 July 2023 (2023/24 income year).
Comments on the ED legislation are due by 28 April 2023.
The proposed changes are very wide in scope and may apply to both Australian and foreign groups that meet the CbC reporting conditions if any group member (under the expanded CbC reporting group definition) is resident in or with a PE in Australia. As such, the proposed changes will require careful review, including to determine their potential application. Impacted groups will need to ensure systems are in place to comply with these new reporting obligations.
Ernst & Young (Australia), Sydney
Ernst & Young (Australia), Melbourne
Ernst & Young LLP (United States), Australia Tax Desk, New York
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor