Australia: Second Country to Incorporate into the legislation BEPS Action plan 13 on Transfer Pricing Documentation
The Australian Treasury has released exposure draft legislation (Subdivision 815-E) to implement new OECD standards on transfer pricing documentation (Master File and Local File) and Country-by-Country (CbC) reporting. The new draft legislation makes Australia the second country (after Spain) to release legislation on this issue as a direct result of the recent guidance set by the OECD as part of its base erosion and profit shifting (BEPS) initiative with respect to Action Plan 13: Guidance on the Implementation of Transfer Pricing Documentation and Country-by-Country Reporting.
Implications for taxpayers?
- Australian headquartered multinational enterprises with annual global group revenue above the A$ 1 billion threshold will be required to lodge a CbC Report in addition to both Master File and Local File.
- Australian subsidiaries and branches of multinational enterprises headquartered outside of Australia with annual global group revenue above the A$ 1 billion threshold will be required to lodge both a Master File and a Local File. No CbC Report will be required in Australia if the ATO is able to obtain the CbC Report from the tax authority in the local entity's parent entity jurisdiction
- The legislation will apply from 1 January 2016
What do we recommend you do now
- Think about preparing a ‘test run’ of the CbC report template for 2015
- Assess whether the preparation of the CbC report will involve changes to current documentation, policies and systems and ensure those changes are implemented before 1 January 2016
- The CbC report template may highlight gaps and inconsistencies in a company’s transfer pricing policies and their implementation. Therefore, it is recommended that companies consider addressing these gaps or inconsistencies before they file their first CbC template.