BEPS Pillar Two, CBC & Transfer Pricing Reporting decision tree: free downloadable guide

Table of contents

• Introduction
• What’s covered in the decision tree
  • Does BEPS Pillar Two apply to your group?
  • Are you required to lodge a Country-by-Country Report?
  • Do you need to lodge a Master File?
  • Which Local File applies - Short Form or Long Form?
  • Do Public Country-by-Country reporting obligations apply?
• Why this matters now
• Download the BEPS & Country-by-Country Reporting Decision Tree

Introduction

If you’re a Tax Manager in a multinational enterprise (MNE), or an Accounting Firm adviser supporting MNE clients, staying across Australia’s evolving international tax reporting rules is increasingly challenging.

With the introduction of BEPS Pillar Two, updates to Country-by-Country reporting, and significant changes to Local File requirements, it’s never been more important to understand your compliance footprint. This decision tree provides a quick way to work out which obligations may apply.

What’s covered in the decision tree

1. Does BEPS Pillar Two apply to your group?

BEPS Pillar Two is now law in Australia, introducing a 15% global and domestic minimum tax designed to ensure large multinational enterprise (MNE) groups pay at least a minimum level of tax in each jurisdiction where they operate. This includes the Income Inclusion Rule (IIR) and Domestic Minimum Tax (DMT) applying to fiscal years starting 1 January 2024, and the Undertaxed Profits Rule (UTPR) from 1 January 2025.

The regime brings new top-up tax calculations, minimum tax returns, and GloBE Information Returns, with the first lodgement due 30 June 2026.

2. Are you required to lodge a Country-by-Country Report?

Country-by-Country reporting is part of Australia’s international tax integrity framework and requires certain MNE groups to lodge a Country-by-Country Report, which provides a high-level breakdown of the global allocation of income, taxes and economic activity across jurisdictions. This enables the ATO to assess transfer pricing and profit-shifting risks.

ATO guidance outlines that Country-by-Country reporting involves three statements:

• Country-by-Country Report (global tax-jurisdiction data)
• Master File (group-wide transfer pricing information)
• Local File (Australia-specific transactional information)

3. Do you need to lodge a Master File?

The Master File is a detailed global transfer pricing document that summarises the MNE group’s operations, supply chains, intangible assets, funding arrangements and global allocation of economic activity. The ATO requires Country-by-Country reporting entities to lodge a Master File within 12 months of year-end, unless an exemption applies.

The content requirements are extensive, covering:

• organisational structure
• global business operations
• intangibles and intercompany financial arrangements
• tax and financial reporting positions

4. Which Local File applies - Short Form or Long Form?

The Local File provides the ATO with Australia-specific transfer pricing information, focusing on related-party transactions, intercompany agreements, restructures and other BEPS-related risks.

From 1 January 2024, the ATO introduced a more detailed Short Form Local File, with expanded mandatory questions and enhanced validation under the updated XML schema.

The 2025 ATO guidance includes stricter criteria on Local File exemption eligibility as well as expanding on local file reporting requirements. Taxpayers must lodge either:

• Short Form Local File only (subject to meeting the criteria), or
• Full Local File (Part A, Part B and Short Form Local File), which includes granular transactional data and supporting agreements.

5. Do Public Country-by-Country reporting obligations apply?

Public Country-by-Country reporting requires certain large MNEs operating in Australia to publicly disclose jurisdiction-by-jurisdiction tax and financial information, including revenue, profit, employees and effective tax rates. This is intended to increase tax transparency and discourage aggressive tax arrangements. It does not replace Country-by-Country reporting obligations – it is additional to the Country-by-Country reporting obligations.

Under updated ATO guidance, Public Country-by-Country reporting also requires registration and the publication of a formal Public Country-by-Country report in a specific approved format.