INTHEBLACK August 2022 - Magazine - Page 38
F E AT U R E
// TA X R E P O R T I N G
“Even if a group doesn’t end up
having to pay any top-up tax
– and this is particularly the case
for Australian-headquartered
groups with a 30 per cent tax
– they will have to do a lot of
compliance and work through
these complex calculations in
order to prove that they don’t
have any top-up tax.”
ALIA LUM, KPMG AUSTRALIA
The government sometimes decides to use accounting
figures, but it doesn’t always produce the results that
people expect, which is another reason why [the
OECD] might want to stay away from this.”
Lum says the Pillar 2 proposal goes beyond
imposing a minimum tax rate of 15 per cent of
accounting profits. She notes that the Pillar 2
calculations will adjust for factors such as book to
tax timing differences like accelerated depreciation,
and allow for adjustments for certain tax-exempt
dividends and disposal gains. “So, it does attempt
to reflect a globally consistent base that looks closer
to taxable profit rather than accounting profit. In
that regard it is better than the US proposal a few
years ago to bring in a minimum tax based on 15 per
cent of pre-tax book income, which received a lot of
pushback from accounting and tax experts.”
COMPLIANCE FEARS
The BEPS 2.0 move is expected to reallocate more
than US$125 billion (A$180 billion) in profits from
about 100 of the world’s largest and most profitable
multinationals to governments worldwide. The
arrangement is set to be reviewed in seven years.
However, compliance costs are now one of the
key concerns for Australian and other multinational
companies. Lum says a compliance impost is
38 ITB August 2022
inevitable. “Even if a group doesn’t end up having to
pay any top-up tax – and this is particularly the case
for Australian-headquartered groups with a 30 per
cent tax – they will have to do a lot of compliance
and work through these complex calculations in
order to prove that they don’t have any top-up tax.”
She adds that the “granularity” of the data
required, including details of deferred taxes, will
create a need for systems redesigns and datamanagement projects to ensure calculations are
done in a timely manner. “This is not just for your
eventual filings, but also for things such as cash flow
forecasting or being able to facilitate quick business
decisions, because it’s hard to work out what tax
you’re going to pay on something quickly when it’s
so complex.”
Lum believes multinationals may need external
support or have to recruit a broad range of financial
skill sets to prepare for the BEPS 2.0 changes.
PRESSING AHEAD
Despite some “difficult discussions” in relation to
the technical aspects of Pillar 1, Secretary-General
Cormann has publicly stated his confidence that the
BEPS 2.0 agreement will eventually be adopted. He
has suggested the implementation of Pillar 1 is likely
to be deferred until 2024, but this does not mean the
delay will necessarily extend to Pillar 2.
Lum notes that Australia has not yet committed
to a start date for the reforms, while the UK and
the European Union are aiming for a 2024 launch.
However, the European Union directive to approve
the Pillar 2 proposals has been held up by Hungary,
which rejected a recent attempt to gain EU-wide
approval. She says the delays and uncertainty are a
cause for concern for some multinationals.
“It does make project management quite complex
for groups when they need to get everything
in place, but each country is coming back with
potentially different start dates.”