Country-by-country (CBC) reporting is part of a broader suite of international measures aimed at combating tax avoidance. Subdivision 815-E of the Income Tax Assessment Act 1997 represents Australia's CBC reporting regime and implements the recommendations of the 2015 final report of Action 13External Link of the Organisation for Economic Co-operation and Development (OECD)/G20 base erosion and profit shifting (BEPS) project.
CBC reporting incorporates revised standards for:
- transfer pricing documentation
- common template for certain entities to report income
- other measures of economic activity for each country in which they conduct their activities.
The measure balances the need to enhance transparency for these entities, with the cost of providing information to tax authorities for the purposes of assessing transfer pricing and other BEPS-related risks.
Determining whether you have CBC reporting obligations in relation to your income year turns on either your SGE or CBC reporting entity status for a previous period. This will depend on the start date of your income year. The rules apply as follows.
- For income years starting on or after 1 January 2016 but prior to 1 July 2019, CBC reporting applies to entities that were a significant global entity (SGE) for the whole or a part of the previous income year (see Significant global entities – prior to 1 July 2019).
- For income years starting on or after 1 July 2019, CBC reporting applies to entities that were a CBC reporting entity for the whole or a part of the previous income year.
If you were the relevant entity type for the whole or a part of the previous income year and you have a specified connection to Australia, you will be required to provide us with 3 statements required by Australia's domestic CBC reporting regime. They will need to be submitted within 12 months after the end of your income tax year.
These 3 statements are:
- CBC report
- master file
- local file.
The statements disclose information that is relevant to your transfer pricing and BEPS-related risk profile. These include your global and local operations and activities, transfer pricing policies, international related party dealings, revenues, profits, and taxes paid.
In most cases, the CBC report will be filed in the jurisdiction of a multinational group’s CBC reporting parent and automatically exchanged with tax authorities in other jurisdictions in which the group operates.
Australia is one of several countries that have signed a CBC reporting multilateral competent authority agreement (MCAA) (see Multilateral competent authority agreement on the exchange of country-by-country reports (PDF 406KB)This link will download a file and Signatories of the MCAA (PDF 214KB)This link will download a file)This link will download a file. The MCAA facilitates the automatic exchange of CBC reports between tax authorities in participating jurisdictions. There may also be additional jurisdictions where an agreement to exchange CBC reports has been implemented bilaterally outside of the MCAA.