The former chair of Kreston Australia has weighed in on the Country-by-Country reporting requirements saga, finding that many clients aren’t prepared for the new deadlines despite penalties of over $500,000 being on the table.
‘Major drama’ in Country-by-Country reporting despite extension
According to the ATO, for the first reporting year, reporting entities that have a due date before 15 February 2018 will now have until 15 February 2018 to lodge their CbC statements, being the Local File, Master File and CbC report as applicable under the law.
Administrative penalties for statements and failure to lodge on time (FTL) penalties have increased as of 1 July 2017 for significant global entities, including up to $525,000 for FTL penalties.
Tricor ChewandDormers director Tony Dormer says CbC has a chance of being an administrative nightmare in terms of the amount of work needed to be done to comply to the reporting requirements as set out by the Organisation for Economic Co-operation and Development (OECD).
“It is a major drama in terms of getting organised and people should be aware that they might be caught by CbC,” said Mr Dormer.
“It is an administrative problem because it has got to be in a certain format, it can't just be in a corporate format.
“We've had several overseas companies provide us with their first attempt at it and they've got to be put in the tax office format which is a major assignment. It is good work but a challenge to get right in the early years,” he added.
“And transfer pricing comes right behind that because if you haven't got a transfer pricing policy in place then you won’t be able to do your CbC reporting very well.”
You can read more about the quirks which are tripping up tax executives in more detail here.