Transfer pricing transparency gains momentum as world leaders sign agreement to share tax information.
The Organisation for Economic Cooperation and Development (OECD) recently announced that Australia, alongside 30 other countries, have signed an agreement to confidentially share the tax information of multinational companies. Tax authorities will begin sharing information in 2017, based on data collected in 2016.
This agreement follows the conclusion of the OECDs Base Erosion and Profit Shifting program; specifically “Recommendation 13”, which advocated transparency for tax administrations through the provision and sharing of tax information of multinational companies.
Australia has adopted the OECD’s recommendation both through the signing of this agreement and through the introduction of country-by-country reporting legislation. The country-by-country reporting legislation (which received royal ascent on December 11, 2015) requires Australian multinationals with a global turnover of greater than AUD$1 billion to prepare and file a country-by-country report on an annual basis. The country-by-country report will contain details such as income tax paid, revenue, main business activity and employee numbers for entities in all tax jurisdictions.
It is the content of these reports which will now be shared amongst the signatories to the OECD agreement. Access to the data will allow tax authorities to take a considered global view on artificial profit shifting.
There has been a push in Australia to release this country-by-country reporting information publicly, but this has been rejected at all levels of Government, as well as by the OECD. Pascal Sain-Amans, the OECD’s head of tax, has said that sharing this information could be misleading and has long been an advocate of keeping country-by-country reporting information confidential.
The signing of this agreement by Australia and the introduction of country-by-country reporting legislation highlights the Australian Government’s commitment to fighting multinational tax avoidance.
If you would like to know your company's obligations under Australia's new country-by-country reporting requirements, or discuss any transfer pricing matters further, please contact Griffith Hack's transfer pricing experts.