Bill to implement public CbC reporting receives green light
A Senate report has called for the public country-by-country reporting measures to be passed despite concerns about the revised regime not aligning closely enough with international standards.
The Senate Economics Legislation Committee has recommended the bill to implement a range of policy measures including public country-by-country reporting be passed.
The bill was referred to the Senate Economic Legislation Committee for inquiry early last month.
Schedule 4 of the bill requires certain large multinational enterprises to publish selected tax information on a country-by-country basis in certain circumstances.
In its report on the bill, the committee said it strongly supports the proposed Australian CbC reporting tax transparency regime, noting that the intent of the bill had support from inquiry participants.
"The committee is of the view that these reforms are world-leading and a major step forward to enhance multinational tax transparency to the benefit of all taxpayers," the committee said.
"The committee recognises that the proposed Australian CbC reporting regime has been designed to set a strong transparency and reporting standard for multinationals while limiting the compliance burden on reporting entities where possible."
It noted that the proposed regime is based on the GRI 207 reporting standard, designed to complement existing reporting regimes and is already being used by many multinationals with operations in Australia.
The committee acknowledged that some participants in the inquiry had called for the Australian regime to be more closely aligned with the EU's regime.
However, the committee said there was evidence indicating that further aligning the required data and specified jurisdictions list with the EU’s regime would have the effect of "limiting improvements to the transparency of multinational tax arrangements".
The committee also noted that significant consultation had gone into this bill and other important reforms to multinational tax arrangements.
"The committee is encouraged by evidence that improvements have been made to the introduced bill through this collaborative consultation process, and commitments from the ATO on producing further guidance material," it said.
Senators from the Coalition said while they support the aim of ensuring tax transparency and accountability for multinationals, the revised regime still fails to align with international and address stakeholder concerns raised in earlier consultation on the reforms.
It noted that the United States Securities Industry & Financial Markets Association Asset Management Group had raised concerns about the legislation diverging from international norms and in ways that diminish the international competitiveness of Australia to cross-border investors.
"The Government’s proposed country-by-country reporting regime goes beyond what other comparable jurisdictions have legislated, such as the European Union," Coalition senators said.
"Aligning Australian standards with those of our international partners is critical to attracting investment."
The Coalition said it was unclear how the ATO exemption process provided in Schedule 4 would operate.
The Coalition senators said they agreed with the recommendation from the Tax Institute that the government commit to conducting a post-implementation regime of the reporting regime within a year or two of the commencement.
"Coalition senators agree that this is the appropriate approach, given the significant impact of and technicalities involved in this measure," they said.
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