As the Australian Government continues to focus on the way it taxes multinational companies, there’s a lot for businesses to navigate to ensure they are meeting all requirements in a coordinated and effective way.
Bookmark these pages to stay across developments affecting SGEs below – and will keep you up to date as more information comes in – but get in touch with our team below to learn what changes apply to you, and what you need to do to comply.
Entities which are considered SGEs now need to be aware of a number of changes in addition to their existing reporting requirements.
We have pulled together all the latest changes affecting SGEs operating in Australia and will keep you updated as more come in. Get in touch with the team to discuss the impact of these changes on your business.
Country-by-Country reporting requirements
Country-by-Country (CbC) reporting is part of a broad suite of international measures aimed at combating tax avoidance through more comprehensive exchanges of information between countries.
Australia’s CbC reporting role mirrors global efforts to shine the light on SGE financial and tax arrangements. The ATO is one of approximately 57 tax authorities that will exchange the CbC reports.
Australia’s CbC reporting requirements apply to SGEs with income years commencing on or after 1 January 2016.
Provision of general purpose financial statements
SGEs are now required to lodge general purpose financial statements. The ATO has recently released its final draft guidance on how ‘significant global entities’ will need to prepare and lodge general purpose financial statements under tax legislation. SGEs with income years commencing on or after 1 July 2016 will be required to lodge general purpose financial statements with the ATO.
Click here to find our Technical Accounting Alert regarding the financial reporting requirements.
Multinational Anti-Avoidance Law
The Multinational Anti-Avoidance Law casts the spotlight onto corporate activity that encourages the reduction of tax liabilities in Australia. It is designed to counter the erosion of the Australian tax base by multinational entities using artificial and contrived arrangements to avoid the attribution of profits to a permanent establishment in Australia.
Similar to the CbC reporting requirements, Australia’s MAAL applies to SGEs with income years commencing on or after 1 January 2016.
Diverted Profits Tax
Australia has continued its aggressive, unilateral approach to tackling Base Erosion and Profit Shifting, with the Diverted Profits Tax introduced to combat multinational companies shifting profits out of Australia. The DPT aims to ensure that the tax paid by global entities properly reflects the economic substance of their activities in Australia and prevents the diversion of profits offshore through contrived arrangements.
Australia’s DPT applies to taxpayers with income years commencing on or after 1 July 2017 and applies irrespective of when a relevant transaction was entered into.
Significant increases to administrative penalties
Effective from 1 July 2017, increased administrative penalties will apply to SGEs that do not lodge income tax returns or documents on time. All local corporate entities regardless of their turnover must assess whether they have SGE status, and for those who are potentially impacted, determine the options available to them and take appropriate action.
Accessing our international network
Australia is just one country focused on tax reform relating to global entities operating within numerous jurisdictions. Multinational organisations must be across the tax requirements of all the jurisdictions in which they operate. It can be a complex process to manage to ensure that you are not only meeting all the requirements of each country, but are doing so in the most efficient way.
Our Grant Thornton network operates across more than 130 countries, enabling access to expertise – including multinational tax issues – in the countries in which you operate.
We regularly publish publications about the global tax issues facing multinational organisations:
Managing tax risk
BEPS: Multilateral instrument
BEPS: Successes and setbacks
Get in touch with the team to learn if your business is affected by these changes and what you need to do to comply, as well as provide you with access to experts in the jurisdictions in which you operate.