Country-by-country reporting measures still stalled in Senate
The bill to implement Australia’s public country-by-country reporting regime looks set to remain in the Senate until at least August.
The legislation to introduce mandatory public country-by-country reporting by multinationals is unlikely to pass through Parliament until August now due to the Senate extending the reporting deadline for the inquiry into the bill.
In mid-May, the bill containing the measure to implement public country-by-country (CbC) reporting, Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, was referred to referred to the Economics Legislation Committee for inquiry and report by 24 June 2024.
Last week, the Senate agreed to extend the reporting date for the inquiry report until 2 August.
The Senate has also divided the bill into two separate bills, with the controversial build-to-rent measures now carved out under a separate bill, the Capital Works (Build to Rent Misuse Tax) Bill 2024.
The public CbC legislation requires large multinational companies, as well as some Australian businesses, to publish selected tax information on a CbC basis for specified jurisdictions.
The information will be published on an Australian government website, with the publication undertaken by the Commissioner.
Entities will have the option to voluntarily publish disclosures for other jurisdictions in which they operate, or on an aggregate basis.
The reporting applies to CbC reporting parent entities with an Australian presence, with $10 million or more of Australia-source aggregated turnover in the current year.
In a submission published on Friday, CPA Australia noted that the final list of specified jurisdictions for public country-by-country (CbC) reporting disclosure remains unknown despite the 1 July 2024 start date for the reporting regime.
"Taxpayers need clarity on which countries to disclose to effectively implement the new requirements. We recommend Switzerland, Singapore and Hong Kong be removed from the final list of specified jurisdictions for disaggregated reporting," the professional body said.
Given that Australia has double taxation agreements with Switzerland and Singapore, and all three jurisdictions are implementing the OECD’s Pillar Two global minimum tax rules, CPA said there appears to be no clear rationale for singling them out for public disclosure.
"In addition, the EU non-cooperative jurisdictions and grey list, updated on 20 February 2024, no longer includes Hong Kong, reflecting the fact this jurisdiction has fulfilled the relevant commitments to meet the EU good tax governance principles."
CPA noted that the Exposure Draft (ED) proposing the new public CbC measures released on 12 February 2024 outlined a minimum compliance approach for public CbC disclosure, requiring disaggregated information for Australia and 41 specified jurisdictions.
"The 41 jurisdictions were detailed in the draft Taxation Administration (Country by Country Reporting Jurisdictions) Determination 2024 released at the same time as the proposed rules in the ED," the CPA submission said.
"However, the final list of specified jurisdictions for disclosure remains unknown at the time of the Bill’s introduction. With a 1 July 2024 commencement date, taxpayers need clarity on which jurisdictions to disclose to effectively implement the new requirement."
CPA said it would also like to see further guidance from the ATO regarding certain aspects of the reporting.
"The new requirement to disclose a group’s tax strategy, in line with the Global Reporting Initiative GRI 207- 1, introduces subjective elements," it said.
"For example, GRI 207-1 a.iv. requires disclosure of how the approach to tax is linked to the business and sustainable development strategies of the organisation, reflecting the ESG focus of the GRI.
"Given this will now be a mandatory requirement in Australia, the ATO should guide the minimum level of detail required to meet this obligation."
The professional body would also like to see further guidance on the approved form for any public CbC report.
