Executive summary

The final legislative instrument that lists the specified jurisdictions for disaggregated reporting under Australia's public country-by-country reporting (PCbCR) regime has now been published.

The list of jurisdictions largely remains unchanged from the February 2024 draft list, with only Liechtenstein removed and no additions made. Notably Hong Kong, Singapore and Switzerland remain on the list.

The regime passed Parliament in late November 2024, without amendment to the Bill introduced in June 2024, and has received Royal Assent.¹ It applies to financial reporting periods commencing on or after 1 July 2024.

Details

Australia's PCbCR regime will require foreign-owned multinational enterprises that have a presence in Australia, Australian multinational enterprises and also purely domestic Australian groups (CbC reporting groups), that have annual global consolidated income of AU$1b or more in the previous year (however a de minimis exception applies if <AU$10m Australia-sourced income) to publish selected tax information. The regime applies to companies and some partnerships and trusts. The AU$1b threshold (approximately US$650m and €620m) is significantly lower than the CbCR threshold in the European Union (EU), United States (US) and many other countries.

The list of specified jurisdictions is important, as reporting under the regime is required on a disaggregated CbC basis for those listed countries, if the CbC reporting group operates in that jurisdiction, as well as for Australia. Reporting may be made on an aggregated basis for the rest of the world.

The legislative instrument is now operative but must be tabled in Parliament when it returns (Parliament is scheduled to next sit from 4 February 2025 and the instrument is subject to disallowance). The Minister may amend the instrument by adding or deleting jurisdictions.

The Australian PCbCR regime is the most encompassing globally and applies to financial reporting periods commencing on or after 1 July 2024, with reporting due 12 months after the financial period end. The information is to be published on an Australian government website, with publication facilitated by the Commissioner of Taxation. Exemptions from disclosing some or all information may be granted on a class or entity basis. Significant penalties (up to AU$825,000 at current rates) apply for late reporting or failure to report and if material errors are not corrected within 28 days.

Further information on the PCbCR rules are set out in EY Global Tax Alert, Australian public country-by-country reporting Bill progress update, dated 5 August 2024.

The Australian Tax Office (ATO) has published initial web guidance on the rules and has confirmed that it will now develop:

• A PCbCR registration form and instructions
• The necessary information collection and publishing platform (using an XML schema to publish on data.gov.au) with forms and instructions
• A Law Administration Practice Statement to set out guidelines and the process for applying for exemptions — currently under development with a draft expected in February 2025
• Further general guidance on the rules
• Guidance on extension-of-time requests to provide the report

EY Australia is participating in the consultation process with the ATO in relation to the above.

Implications

The PCbCR rules are very wide in scope and groups must determine now whether they will be subject to the disclosures.

Affected multinationals and purely domestic Australian groups will need to ensure that systems are in place to comply with these new reporting obligations. Multinational groups will need to develop a worldwide approach to comply with other reporting regimes, notably including the EU's CbCR directive that is now being enacted by EU Member States.

This additional public reporting will also require covered entities to educate their boards, align the reporting with their current environmental, social and governance (ESG) policies and prepare for the effect that transparency could have across a wider group of stakeholders, including tax authorities, corporate regulators (in Australia and overseas), investors, short sellers, journalists and nongovernmental organizations.