Strategizing Multinational Tax Risks

http://www.comlaw.gov.au/Details/C2013A00124

Australia has enacted tax return disclosures into law via amendments referenced in Schedule 5, Tax secrecy and transparency.  The Commissioner must, as soon as practicable after the end of the income year, make publicly available the following information for corporate tax entities with reported total income of $100 million or more, according to information reported in the entity’s tax return:

• ABN
• Total income for the income year
• Taxable income or net income (if any) for the income year
• Income tax payable (if any)

All multinationals should develop an action plan, if not already in place, outlining the method by which tax return disclosures are to be reported in Australia and other countries around the world.  The methodology should be aligned with the CFO, Board of Directors and senior leaders of the business.

The tax return information chosen for disclosure will not provide reasons why there may be significant differences between total income, taxable income and the resulting income tax payable (if any), and will likely provide a forum for public scrutiny and questions surrounding noted variances.

Accordingly, critical decisions re: additional voluntary disclosures, responses to questions generated by the disclosures, and other relevant factors should be considered within the context of the global Tax Risk Framework.  Valuable information can be obtained from tax disclosures of the extractive industries, including the impact of indirect taxes and non-tax contributions.

Tax transparency is a rapidly growing trend for which global strategies and Best Practices should be adopted to timely address current and future developments.