In his speech to the Australian federal parliament on 12 May 2015 in support of the Bill for the 2015 Budget, Treasurer Hockey announced that with effect from 1 January 2016, OECD transfer pricing documentation standards will apply to multinational corporations with global annual income of AUS$1 billion or more.
In order to implement the initiative the Australian Taxation Office (ATO) will receive the following information on large companies that operate in Australia:
- A Country-by-Country Report showing information on the global activities of the multinational, including the location of its income and taxes paid.
- A master file containing an overview of the multinational's global business, its organisational structure and its transfer pricing policies.
- A local file that provides detailed information about the local taxpayer's intercompany transactions.
Together, these reports will provide the ATO with a global picture of how multinational entities operate, assisting it to identify multinational tax avoidance.
The government will provide the ATO with AUS$11.3 million over the forward estimates period to implement the new standards. This measure is estimated to have an unquantifiable gain to revenue over the forward estimates period1.