International Subsidiaries and Branches - New Reporting requirements
Reporting requirements impact on Foreign Subsidiaries and Branches:
Australia has a lower threshold compared to other Jurisdictions when it comes to Country-by-Country reporting (CbC) and Australia’s broader suite of international measures aimed at combating international tax avoidance and businesses meeting their transfer pricing documentation requirements.
Most of the critical compliance measures have taken effect post 1 January 2016 and will apply to financial processes and the preparation of year-end financial accounts post this date. These critical measures include the following:
The multinational anti-avoidance law (MAAL): Came into effect 1 January 2016;
Country-by-Country (CbC) reporting: Came into effect 1 July 2016;
The obligation to lodge general purpose financial statements with the Tax Office unless the financial accounts have been lodged with ASIC (Company’s office): Came into effect 1 July 2016; and
Proposed diverted profits tax, proposed to take effect from 1 July 2017 (currently awaiting final Legislation after a consultation process).
From a Tax compliance perspective multinational entities with an annual global income of AUD $1 billion or more with operations in Australia are prima facie bound by the above legislative processes.
Many Australian Subsidiaries and Branches (irrespective of the size of their Australian operational footprint) being part of larger global conglomerate groups, may be blissfully unaware that if their parent company overseas is deemed a significant global entity under the above pieces of Legislation, then there exists a compliance responsibility to report to the Australian authorities.
Where Australian Subsidiaries and/or Branches by association with their parent fall into the above catchment, a review of their ATO and ASIC compliance is strongly recommended.
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