Country-by-Country reporting

Country‑by‑Country (CbC) Reporting is a key component of the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan, designed to enhance transparency in the global tax system.

In Australia, CbC reporting obligations apply to Country‑by‑Country Reporting Entities (CBCREs), being multinational groups with annual global revenue of A$ 1 billion or more. These entities are required to file three types of reports with the Australian Taxation Office (ATO): the CbC report, the master file, and the local file. Together, these documents provide a comprehensive view of the group’s global operations, transfer pricing policies, and financial results by jurisdiction.

What CbC reporting shows the ATO

The CbC report presents aggregated data by jurisdiction, including revenue, profit before tax, income tax paid and accrued, employee numbers, capital, retained earnings and tangible assets. This information helps tax authorities identify transfer pricing risk and potential profit shifting.

The master file provides a high‑level view of the group’s global business and transfer pricing framework. It outlines organisational structure, key activities, intangibles and intercompany financing arrangements. It provides the ATO with clearer context for the CbC data and insight into how value is created across the group. The ATO expects the master file to align with OECD guidance and to be lodged annually.

The Australian local file focuses on the Australian entity and its related party dealings. It consists of the Short Form Local File, Part A and Part B.

Short form local file

The Short Form Local File (SFLF) is mandatory for all CBCREs, even where there are no international related party dealings. For reporting periods starting on or after 1 Jan 2024, the ATO significantly expanded the SFLF, replacing free‑text responses with structured and more detailed disclosures.

The SFLF now requires disclosures across several key areas:

• Organisational structure: Including reporting lines and offshore reporting arrangements.
• Business strategy and key competitors: Detailed descriptions of business lines, strategic objectives, and key competitors.
• Significant restructures: Including step-by-step breakdowns of restructures involving related parties, with information on commercial, global tax, and Australian tax impacts.
• Intangible transactions: New arrangements involving transfers, licenses, or creations of intangibles, with anticipated tax impacts.

Automatic exemptions no longer apply. All CBCREs must complete the SFLF.

Local File – Part A

Part A of the Local File focuses on transactional data relating to IRPDs. Entities must report:

• Names and tax identifiers (TFN/ABN) of Australian counterparties.
• Names, countries of tax residence, and permanent establishment details of non-resident counterparties.
• Transaction categories and financial values of each transaction.
• Transfer pricing methods applied and whether documentation exists to support the pricing.

This information gives the ATO a clear view of the scale and nature of cross‑border dealings.

Local file – Part B

Part B contains qualitative support for the transactions reported in Part A, including copies of intercompany agreements.

Together, the local file enables the ATO to assess whether related party transactions reflect arm’s length outcomes and where compliance risk may sit.

How we can help

We assist our clients in meeting their CbC reporting obligations by preparing compliant documentation, reviewing transfer pricing policies, and advising on risk mitigation strategies. Our team stays abreast of evolving ATO requirements and international developments to ensure clients maintain transparency while protecting commercially sensitive information. Whether you are preparing your first CbC report or responding to new disclosure requirements, we provide tailored support to help you navigate this complex regulatory landscape.