BEPS, Transfer Pricing and Transparency & Governance

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Talking Tax - A boardroom issue

BEPS, Transfer Pricing and Transparency & Governance

In Australia and around the world, media and governments are making claims that large businesses are not paying their ‘fair share’ of tax. As a result, many organisations are reviewing their tax strategy.

Overview

Recent developments, such as OECD reports into base erosion and profit shifting (BEPS) and the tax transparency reporting regime in Australia (requiring publication of total income and income tax payable), have further fuelled the debate and will increase organisations’ reputation risk.

The ATO has also recently commenced aggressive BEPS audit activity targeted initially at companies operating in the digital economy “to ensure Australia is getting its fair share of taxation”. The initial audit focus of the ATO has been on digital and software companies; however, banking and financial services are now coming under review.

Therefore, the time to talk to your stakeholders is now.

BEPS, Transfer Pricing and Transparency & Governance

In this new environment, tax stakeholders should be considered very broadly and may include:

  • Board and audit committee members
  • CFOs
  • Heads of risk and internal audit
  • Public, media and investor relations.

To facilitate an effective conversation with stakeholders the following questions may be useful:

BEPS/Transfer Pricing
  • Does your share of net taxable profit correlate with the percentage of global activities in Australia?
  • Is your organisation’s effective tax rate lower than industry peers?
  • Does your organisation have entities in low-tax jurisdictions or ‘tax havens’?
  • Has your organisation undertaken a restructure involving Australian operations?
  • Would your organisation’s key internal trades be observed in the open market?
  • Do you have material inbound related-party debt? Do you have hybrid debt arrangements with related parties?
Transparency and Governance
  • Have you assessed the impact of the recent tax transparency reporting regime (including the publication of total income and income tax payable)?
  • Would your systems allow you to extract and analyse all taxes paid by tax and jurisdiction?
  • Do you have a board-approved tax governance policy?
  • Have board members and your public relations advisers been briefed to be able to communicate to the media and explain the company’s tax profile?
BEPS and Transfer Pricing

How Deloitte can help

  • Strategic reviews to identify tax and/or reputation risk
  • Review of transfer pricing positions and preparation of improved documentation
  • Review of historic tax planning in light of the new environment
  • Proactive management of ATO queries and audits
  • Tax Clarity Reports (detailing total taxes and broader economic contributions)
  • Review of quality of tax data extracted from systems
  • Tax governance workshops
  • Tax communication and PR strategies.
How Deloitte can help

Multinational tax and reputation risk: Are you prepared?

Contact us

Geoff Gill

Geoff Gill

Partner, Tax

Geoff Gill is a transfer pricing partner and economist with Deloitte’s Cross Border tax group in Sydney. Geoff has over 14 years experience in transfer pricing, and has worked in both London and Sydne... More

David Watkins

David Watkins

Partner, Tax

David Watkins is the leader of the Deloitte Australia Tax Insights & Policy group. David has over 25 years’ experience in corporate income tax and international tax covering a wide range of tax issues... More