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Rough seas ahead for Multinationals?  Let’s deep dive on the new CbCR & Transfer Pricing documentation rules

Multinationals face an administrative burden implementing the new Country by Country Reporting (CbCR) & Transfer Pricing Documentation Rules if they are not prepared.  A round table report highlights the challenges to be faced by multinationals as they deal with different rules from country to country.

At the recent Alliott Worldwide Conference, Hanrick Curran’s Tax Partner and Alliott Group Deputy Chairman, Jamie Towers, engaged in a global round table discussion on the new CbCR & Transfer Pricing Documentation Rules, specifically Action 13 of the Base Erosion and Profit Shifting (BEPS) Action Plan, aimed to enhance the ability for national tax authorities to exchange information targeting the avoidance of tax by international business.

The round table report provides multinational enterprises (MNEs) basic guidance on the CbCR and transfer pricing documentation including recommendations, an update on the status quo in different countries and opinions from local tax practitioners.

In Australia, the CbCR applies to significant global entities which have over AUD $1 billion turnover for financial years starting on or after 1 January 2016.  As Jamie emphasised in the report, “MNEs cannot start soon enough to get prepared” and must file reports on time.

Requirements depend on whether the parent company is in Australia or if it is only an Australia subsidiary – if the former, the parent company is required to lodge the CbCR Report, master file and local file using XML schema software by 31 December, one year after the end of the financial year.  If the reporting Australian entity is only a subsidiary company, it is required to prepare and lodge the local file, but also lodge the master file – the parent company’s master file can be used if it is in English, but if not available, it needs to be converted before being lodged.

The round table report provides further information on:

  • What Action 13 and CbCR is all about;
  • What the standard model for CbCR reporting looks like;
  • Who files the CbCR document and when; and
  • What is contained in the master and local files.

Hanrick Curran is well placed to assist businesses with their tax strategy when involved in or considering cross border business.  For more information on the new CbCR and Transfer Pricing Documentation Rules please speak with your usual Hanrick Curran adviser or alternatively contact Jamie Towers on 07 3218 3900.

Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

 

Jamie Towers