Australia is leading the charge in matters of tax transparency, and while measures and focus in this space have already increased dramatically in recent years, this trend is set to continue.
Big business in Australia already makes disclosures at the public level, which includes the Board of Taxation’s voluntary tax transparency code, and the ATO’s annual report of entity tax information.
Disclosures to the ATO include the International Dealings Schedule, which details any international related party dealings, and through transfer pricing documentation for related party transactions, via the ATO's Key Taxpayer Engagement and Top 1,000 program, and many other measures. Australia has also adopted the OECD Country by Country reporting recommendations.
This minefield of obligations and dealings with a number of bodies, means that advisers need to understand exactly what information is required to be disclosed, to who, when, and how.
While penalties can apply, and the ATO can use its formal powers of information gathering for those not being open and transparent, the overall goal should be kept in sight – are these increased disclosure requirements actually resulting in taxpayers paying their fair share of tax?
It has been said that: “Publicity is justly commended as a remedy for social and industrial diseases.
Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”
The belief that greater transparency and public scrutiny will result in large corporate taxpayers paying their “fair share of tax” has been a key driver of increased tax disclosures in recent years.
In their article in The Tax Specialist, Tax disclosures - Is sunlight the best disinfectant?', 'Enzo Coia, CTA, Lauren Jones, CTA, and Anna Williams, (all Deloitte) consider the range of additional disclosures that have been introduced either on a voluntary or compulsory basis in recent years.
The article also analyses when disclosures should be made, to whom they should be made, and the impact of not disclosing information.
In addition, they consider how fairness should be measured and refers to published information concerning tax gaps and taxes paid.
In light of these additional disclosures and using international data about tax, the article asks whether the increased disclosures have resulted in greater “fairness”.
You can access the article here.
Enzo is a Tax Partner at Deloitte. He has 20 years’ experience providing advice on Australian and international taxation matters. Specialising in mergers and acquisitions, and divestments. He has a deep understanding of the energy and resources industry, having spent several years in a senior tax leadership position at a multinational oil and gas company, and has a particular interest in tax consolidation and, capital management.
Lauren is a Partner in the Deloitte Perth Business Tax team. She specialises in providing Australian taxation advice on merger and acquisition transactions, particularly in the energy and resources sector. This includes managing large, complex tax due diligence projects, tax issues around financing structures, profit repatriation, permanent establishments, equipment leasing and global restructures as well as managing post-transaction tax integration issues.
Anna is a Senior Analyst with Deloitte.