On 27 January 2016, the OECD announced that, as part of it’s member countries’ continuing efforts to boost transparency by multinational enterprises (MNEs), 31 countries[1] (including Australia) signed the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of Country-by-Country reports.
The signing ceremony marked an important milestone towards implementation of the OECD/G20 BEPS Project and a significant increase in cross-border cooperation on tax matters.
The MCAA will enable consistent and swift implementation of new transfer pricing reporting standards developed under Action 13 of the BEPS Action Plan.
It will ensure that tax administrations obtain a complete understanding of the way MNEs structure their operations, while also ensuring that the confidentiality of such information is safeguarded.
The OECD Secretary General said: “Country-by-Country Reporting will have an immediate impact in boosting international co-operation on tax issues, by enhancing the transparency of multinational enterprises’ operations”. “Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on the key indicators of multinational businesses. This is a much-needed tool towards the goal of ensuring that companies pay their fair share of tax, and would not have been possible without the BEPS Project.” (read the speech).
[OECD website]
Treasurer’s comment – 28 January 2016 Media Release
The agreement will facilitate the exchange of multinationals’ country-by-country reports between tax authorities in different jurisdictions. These reports will contain details of multinationals’ international transactions, including the location of their income and taxes paid, as well as setting out their transfer pricing policies.
Country-by-country reporting is one of the outcomes of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project and a key component of the Turnbull Government’s recently enacted landmark multinational tax avoidance law.
Access to adequate transfer pricing information is essential to tackling international profit shifting. The agreement signed in Paris will enable the ATO to exchange key information on the activities of multinationals with foreign tax administrations in the most effective and efficient way possible.
[Treasurer’s Media Release] [LTN 17, 28/1/16]