Tax transparency measures

The Federal Government released the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Bill 2023 (Bill) in June 2023.  The Bill addresses tax transparency measures for multinational groups requiring Australian public companies (listed and unlisted) to disclose information on their subsidiaries including details on their tax residence in their financial reports.  The Bill amends the Corporations Act 2001.

These proposals complement the Government’s commitment to implement a public beneficial ownership register as part of its multinational tax integrity package which applies to a broader range of covered entities.

These proposed amendments are part of the Government’s broader regulatory mix to improve corporate disclosures and include but are not limited to disclosures of tax residency of subsidiaries of Australian public companies.

While there is clearly a global trend towards mandating public reporting as a means of enhancing public scrutiny of multinational tax arrangements, the disclosure of tax residency status of entities into the financial reports of public companies has largely been voluntary up to now.

If approved by both houses of parliament the amendments apply to financial statements prepared by public companies for each financial year commencing on or after 1 July 2023.

With the trend of more information in the public domain and multinationals tax affairs under greater public scrutiny, organisations need to ensure they have robust approach to tax governance practices, in order to support their public tax reporting.

The Bill has been referred to the Senate Economics Legislation Committee which is due to report by the end of August 2023.

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