Chartered Accountants ANZ has lodged a submission with Treasury on the exposure draft legislation (ED) and explanatory materials (EM) to implement the October 2022-23 Budget announcement to require certain large multinationals to publicly disclose selected tax information on a country-by-country basis (CBC).

Concerns with the ED and EM include:

• The proposed rules require a CBC reporting parent to publish the additional items for each jurisdiction that are not required under current global public CBC standards such as the EU Directive on public CBC reporting (EU Directive2021/2101), or Global Reporting Initiative’s Sustainability Reporting Standards GRI 207: Tax (2019) (GRI 207) -  we query whether the public need this information as it adds significantly to the compliance burden of collecting this information.
• There should be specific exemptions included in the legislation to cover commercially sensitive information and for foreign headquartered subsidiaries and branches with a minimal presence in Australia.
• The application date of the measure should be deferred as the way the Application provision is currently drafted means that December early balance entities are already subject to the measure from 1 January 2023.
• The early disclosure of the Pillar Two effective tax rate for public consumption may cause confusion and will do little to improve public perception or understanding of the tax system. Therefore, we recommend the requirement to publish the effective tax rate based on Pillar Two rules be removed, or at least deferred until the Pillar Two rules have been enacted in more jurisdictions around the world (including Australia).

Companies will be concerned about the manner in which the ATO will publish the information so there should be a provision in the legislation that allows voluntary disclosure by a CBC reporting parent of addition information to explain the data and this should be published by the ATO to provide further transparency and avoid any misconceptions about the published data.