Australian Public CbCR: Disclosure of information for Switzerland on a jurisdictional basis – how should Swiss MNEs prepare?

On 10 December 2024, Australia passed its Public Country-by-Country Reporting (CbCR) law. This law affects multinational entities that have material operations in Australia by requiring the public release of specified tax and other information on a jurisdiction-by-jurisdiction basis together with a statement on their approach to taxation, for reporting periods starting on or after 1 July 2024. While information for most jurisdictions outside of Australia may be aggregated, Switzerland is on a list of specified jurisdictions, published by the government on 18 December 2024, for which such information will need to be provided on an individual jurisdiction basis.

Australia Public CbCR

The Australian Public CbCR applies to parent entities, independent of jurisdiction, of groups with annual global income of AUD 1 billion or more and where the MNE’s aggregated turnover includes at least AUD 10 million of Australian-sourced income and an Australian presence. The measure, effective for financial years starting on or after 1 July 2024, requires the CbCR reporting parent to submit the information to the Australian Taxation Office (“ATO”) in the approved form within 12 months after the end of the reporting period. The ATO will then make this information available on a centralised Australian government website.

Information to be published include the CbCR reporting parent’s name, names of each entity in the CbC reporting group, a description of the CbCR reporting group’s approach to tax based on GRI 207’s guidance as well as different data points, most of them aligned with the one required for the OECD CbCR. Whilst certain information can be published on an aggregated basis for most of the jurisdictions, it should be disclosed on an individual jurisdiction basis for Australia and a list of 40 specified jurisdictions, including Switzerland.

The data points that will need to be provided for Switzerland will be:

1. the name of the jurisdiction
2. a description of main business activities
3. the number of employees (on a full-time equivalent basis) at the end of the reporting period
4. revenue from unrelated parties
5. revenue from related parties that are not tax residents of the jurisdiction
6. profit or loss before income tax
7. book value at the end of the reporting period of tangible assets, other than cash and cash equivalents
8. income tax paid (on a cash basis)
9. income tax accrued (current year)
10. the reasons for the difference between income tax accrued (current year) and the amount of income tax due if the income tax rate applicable to the jurisdiction were applied to profit and loss before income tax
11. the currency used in calculating and presenting the above information.

Amounts reported should be based on amounts shown in the audited consolidated financial statements. Amounts will still be shown as total over all entities in the jurisdiction, as in the OECD CbCR standard. Corrections of material errors must be made within 28 days of the entity becoming aware of the error and there is also a provision for entities to correct non-material errors. A penalty of up to AUD 825,000 will apply in the case of late or non-lodgement or for failure to correct a material error. There is currently no detail on how the penalty regime will apply to CbC reporting parents that are not Australian residents, such as foreign residents with Australian operations.

Certain entities may be granted an exemption from filing by the ATO if it would affect national security, breach Australian law or the laws of another jurisdiction, or result in substantial ramifications for the entity (by an objective standard) by revealing commercially sensitive information. The ATO indicates on its website that it is planning on the release of a practice statement by February 2025 outlining the approach to reporting exemptions.

At this stage, several considerations need to be made. These include determining overlaps with other standards or regimes such as GRI 207, EU Directive 2021/2101 (“EU Public CbCR”), local law specificities, OECD CbCR, and Pillar 2 Transitional Safe Harbour, as well as mapping out the additional information required. It is also essential to understand the extent to which the sources of information and the definitions of data fields align across different reports (“consolidated”, “qualifying”, or “aggregation”). Lastly, the technical and operational aspects of the conversion and lodgement process, which involve aggregation, schemas and software, lodgement portals, data management, and internal controls, should be reviewed.

After considering all these steps, we recommend to develop a reliable Financial Reporting System that centralises processes where feasible by creating a “Master” CbC Source and a centralised calculation process for the amounts.

EU Public CbCR

Australian Public CbCR requirements come on top of the EU Public CbCR. EU Directive 2021/2101 of 24 November 2021 introduced an obligation for MNEs with annual global consolidated revenue over EUR 750 million and operations in more than one EU member state to make a simplified CbC Report publicly available for financial years starting on or after 22 June 2024. The Directive has been transposed into local legislation in several EU countries, with certain deviations and additional timing requirements. For example, Romania has transposed EU public CbCR for financial years starting on or after 1 January 2023, Croatia from 1 January 2024, Sweden from 31 May 2024, with publication required 12 months after the year-end. The information to be disclosed is widely aligned with the OECD CbCR and must be provided separately for each EU member state and for each jurisdiction on the EU list of non-cooperative jurisdictions for tax purposes and the preliminary nomination EU list. (Switzerland is not included in any of these lists.) Information for other third-country operations may be aggregated. For EU-parented groups, the EU parent entity is responsible for reporting. For non-EU-parented groups, each qualifying EU subsidiary or branch must publish the CbCR information in their jurisdiction. However, these may be exempt from this obligation where the non-EU parent published the report on its website and designated one of the EU subsidiaries or branches as a “subsidiary publisher” to file the report with their national commercial registry, if the domestic legislation of the country allows.

It is crucial to monitor the enactment of the EU Public CbCR legislation in the jurisdictions they are located in, and in near time decide on a publishing/filing strategy that works best for them as well as the elements to be streamlined with the Australian Public CbCR requirements.

How to prepare

Swiss MNEs should start preparing for the new disclosure requirements through i) data preparation as well as ii) considerations around communication strategy involving various stakeholders.

Regarding data preparation, given the need to comply with various measures and timelines, a streamlined process is key. It is essential to address any discrepancies and identify interdependencies for different CbCR requirements (OECD CbCR, Public CbCR and Pillar II CbCR Safe Harbor) as well as other tax and transfer pricing compliance requirements as soon as possible. By doing so, MNEs can ensure a more efficient and cohesive approach to compliance, thereby enhancing their overall governance and reporting framework.

Regarding communication and stakeholder management, Clients should ensure that relevant stakeholders are informed on what information will be made available to the public and in what form. E.g., it should be ensured that Communications & Investor Relations teams are informed about what information will be available to the broad public going forward. These teams should also be consulted to consider any proactive communication prior to or at the time of the publication of the CbCR, e.g. if explanations would be deemed helpful.

If you would like to discuss more on this topic, please reach out to our Transfer Pricing experts at Deloitte. See contacts below.

Authors

• Martin Krivinskas - Partner, International Tax & Transfer Pricing
• Thomas Hug - Partner, National Tax Office
• Kayla Imholz - Senior Manager, Tax & Legal