Transfer Pricing Updates
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Raising the bar: How Public Country by Country reporting and the redesigned Voluntary Tax Transparency Code are redefining tax transparency 

Key points

  • Australia is raising the bar on corporate tax transparency with two major developments: the introduction of Public Country-by-Country (CbC) reporting, and the redesign of the Voluntary Tax Transparency Code (VTTC).
  • The new Public CbC regime, effective for periods starting on or after 1 July 2024, requires large multinational groups with over A$10m of Australian sourced turnover to publicly disclose detailed financial and tax data for each jurisdiction in which they operate. In parallel, the VTTC has been redesigned to encourage more meaningful and globally aligned tax disclosures.
  • Both initiatives reflect a shift from compliance to proactive transparency, with significant implications for governance, reputational management, and stakeholder trust. Multinational enterprises should begin preparations now, focusing on data readiness, internal controls, and strategic communications to meet these new obligations and manage associated risks.

The global landscape

Across the globe, the bar for corporate tax transparency continues to rise. Once viewed as a compliance measure, corporate tax behaviour has become a defining measure of fairness, accountability and social responsibility. Governments are introducing new disclosure regimes, investors are embedding tax integrity into ESG assessments, and communities are calling for clearer insight into how companies contribute to public finances. In Australia, these global forces are mirrored by growing expectations from the Australian Taxation Office (ATO) and stakeholders alike with ESG-driven investor focus, prompting a shift from meeting obligations to proactively demonstrating trust and transparency. 

A major catalyst for this evolution has been the introduction of Public Country-by-Country (CbC) reporting. 

Australia’s public Country-by-Country reporting regime takes shape with detailed filing instructions

To meet the Australian Government’s commitment to greater transparency and open scrutiny, on 29 November 2024, the Australian Parliament passed new laws introducing PublicCbC reporting. The rules apply to CbC reporting parent entities with an Australian presence, with AUD $10 million or more of Australia-source turnover in the current year.

These laws mandate that large multinational groups submit data on their global financial and tax footprint to the ATO, which will be made publicly available. These rules will come into effect for periods beginning on or after 1 July 2024, with the first reports falling due on 30 June 2026. 

Instructions to complete the Public CbC report 

On 31 October 2025, the ATO released draft Instructions to complete the Public CbC report (the draft instructions) for consultation. The draft instructions set out how multinational groups must prepare and lodge their annual Public CbC reports. The draft guidance is intended for multinational enterprises (MNEs) subject to Australia's public tax transparency requirements and aligns with global standards while introducing unique Australian elements.

The draft instructions serve as a detailed manual for preparing and lodging the Public CbC report, organised into an overview and six sections (A to F) that correspond with the reporting workflow. The report must be completed in English and lodged using a specified XML schema, the “approved form” for lodgement. The content of each of the six sections are summarised below. 

This section captures identification and other relevant contact details about the reporting entity, and a formal declaration by an authorised person affirming the report's accuracy. 

This section requires: 

  • A listing of all constituent group members by jurisdiction of tax residence, including dormant entities 
  • A narrative "approach to tax" statement aligned with GRI 207-1, describing the group's tax philosophy, governance, risk appetite, and dealings with tax authorities. The statement may include a web link to an existing public tax strategy.

The core of the report, Section C, requires detailed country-by-country data for Australia and each specified jurisdiction, Currently, 40 countries have been designated by the Treasurer as such which, interestingly, does not entirely align with the similar list for the International Dealings Schedule. For each jurisdiction, the following must be reported: 

  • Jurisdiction name (full, unabbreviated) 
  • Description of main business activities (free text, up to 4,000 characters)
  • Number of full-time equivalent employees (FTE) 
  • Revenue from unrelated parties 
  • Revenue from related parties that are non-resident in the jurisdiction
  • Profit or loss before income tax (separate fields for profit and loss) 
  • Tangible assets (book value) 
  • Income tax paid on a cash basis, including withholding taxes and prior year payments 
  • Income tax accrued for the current year (excluding deferred taxes) 
  • Narrative explanation of material differences between accrued tax and expected tax based on statutory rates 
  • Currency used for reporting, with instructions to use average exchange rates if conversion is necessary. 

Each data field includes a flag for partial exemptions, if approved by the ATO. The data must reconcile with audited consolidated financial statements, and "stateless" entities are included in Section D (aggregated data).

This section aggregates data for jurisdictions not individually reported in Section C. It includes similar fields as Section C except: 

  • No jurisdiction names are provided 
  • No requirement for business activity descriptions or tax difference explanations 
  • Currency reporting remains mandatory. 

Companies may choose to report all jurisdictions individually, in which case Section D may be left blank. Partial exemptions and the aggregation approach offer some flexibility. 

The draft instructions outline that the report must be submitted electronically in the prescribed XML format via email to PublicCBCReports@ato.gov.au. The ATO requires strict adherence to the approved XML schema and notes that the data will be made public as provided without amendment.

If material errors are discovered, companies must correct them within 28 days by submitting a complete amended XML report. All fields must be completed even if only one value changes.

Key changes and differences from previous guidance and international standards

  • Adoption of GRI 207 definitions: The instructions formally prioritise GRI 207: Tax 2019 over OECD BEPS Action 13 guidance for data definitions and narrative disclosures, and mandates certain additional qualitative components such as the approach to tax and effective tax rate (ETR) explanations 
  • Consolidated figures: The instructions emphasise that reported figures must reconcile with audited consolidated financial statements or be compiled as if consolidated accounts were prepared 
  • Exemptions integrated into the form: The XML schema incorporates flags for full or partial exemptions, allowing omission of certain data only if approved by the ATO. Unauthorised data omission would result in non-compliance 
  • Centralised format and lodgement: The ATO effectively acts as the gatekeeper, mandating a uniform XML submission and centralised publication, unlike the EU’s decentralised approach 
  • Specified jurisdictions list: Australia’s list is broader (40 jurisdictions), including economies such as Hong Kong and Singapore, requiring more granular reporting than some other regimes 
  • Technical clarifications: The instructions provide explicit guidance on handling negative values, employee metrics, income tax definitions, currency translation, and dual residency. 

Redesign of the Voluntary Tax Transparency Code

Recognising the changing global and domestic transparency landscape, which includes developments like Public CbC reporting, consolidated entity disclosure statements, the Global Reporting Initiative (GRI 207), as well as increased community interest in tax behaviour, the Government tasked the Board of Taxation with reviewing and redesigning the Voluntary Tax Transparency Code (VTTC) in August 2024. 

Originally launched in 2016, the VTTC is a set of principles and minimum standards to guide medium and large businesses in the public disclosure of their tax information. 

Finalised at the end of October, the redesigned VTTC is effective for years starting 1 July 2026 however, early adoption is encouraged. Entities currently reporting under the existing VTTC may transition to the redesigned VTTC voluntarily, while those yet to participate have a clear opportunity to align their transparency approach with evolving stakeholder expectations. 

Key changes in the 2025 redesign 

The redesigned VTTC reflects a shift from static disclosure towards purposeful transparency, encouraging entities to explain not only what tax they pay but how their tax outcomes reflect business operations, their approach to governance and corporate values. 

The new framework introduces clearer guidance, a structured yet flexible framework and greater alignment with global standards. It distinguishes between entities that are subject to Public CbC reporting and those that are not, ensuring relevance across different corporate profiles but also seeks to reduce duplication with other regimes. Entities will need to map disclosures and ensure consistency across transparency regimes. 

The Part A - Qualitative information and Part B - Quantitative Information structure from the original VTTC has been updated: 

  • Part A now labelled Tax data
  • Part B now labelled Overall approach to tax, with greater alignment to the GRI 207. 

Entities can choose the level of details appropriate to their operations with optional disclosure for those wishing to demonstrate leading practice which are largely based on GRI 207, for example, reporting on non-corporate Australian taxes and government imposts, global group income tax paid, reconciliation to the ATO Corporate Tax Transparency Disclosures, the entity’s tax governance, control and risk management framework and stakeholder engagement and management including outcomes of justified trust reviews. 

The VTTC Report can be published at any time. To provide consistency, the Board of Tax recommends that the VTTC is published no later than: 

  • For Public CbC reporters: The publication date of the Public CbC report for the same period
  • For non-Public CbC reporters: 18 months from the end of the tax period. 

While there is no mandatory format for presentation of the VTTC disclosures, the draft instructions include an example template format for both Public CbC reporters and non-Public CbC reporters, and a self-assessment reporting checklist to aid with completion, comparability and consistency of reports.

Elements of the 2025 redesign

The elements of the redesigned VTTC are set out below. 

VTTC reporting requirements Public CbC reporter Non-public CbC reporter 
Entity name Yes Yes 
Public CbC reporting status Yes n/a 
Link to completed CbC report Optional n/a 
Activities Covered by the public CbC report Yes 
Material subsidiaries Covered by the public CbC report Yes 
Number of employees Covered by the public CbC report Yes 
VTTC reporting requirements Public CbC reporter Non-public CbC reporter 
Total tax contribution Yes Yes 
ETR for global and Australian operations
Yes Yes
Reconciliation of accounting profit to income tax expense and income tax paid or payable
Covered by the public CbC reportYes
Reconciliation to ATO corporate tax transparency disclosures
OptionalOptional
VTTC reporting requirements Public CbC reporter Non-public CbC reporter 
Approach to tax
Covered by the public Cbc reportYes 
Tax, governance, control and risk management
OptionalOptional
Stakeholder engagement and management of concerns related to tax
Optional Optional
International related party dealings summary
YesYes

Practical insights and compliance considerations across Public CbC reporting and the redesigned VTTC 

  • Strategic communications and reputational management: With heightened transparency expectations, senior executives and boards should consider how tax disclosure aligns with stakeholder appetite, including investors, public interest groups and employees 
  • Awareness of obligations: For MNEs headquartered in jurisdictions that do not have CbC Reporting (including for example, the USA), an education process will likely be required to communicate the obligations, exemptions and processes, as the detailed requirements in Australia may not be well understood or received by key stakeholders in those jurisdictions 
  • Gap analysis (CbC): MNEs should conduct dry runs to assess current data availability, entity listings, and alignment with audited consolidated accounts. Systems may require enhancement to produce the required country-level data in the specified format
  • Gap analysis (VTTC): Entities should assess current tax transparency disclosures (including existing VTTC practice) against the redesigned components. Readiness work should include template development 
  • Leverage existing reporting: Coordination with EU public CbCR, and GRI 207 reporting efforts can create efficiencies and ensure consistency for those MNEs to which those rules already apply
  • Governance and review: A senior officer’s declaration is required for the Public CbC report, whereas board sign-off should be obtained for any VTTC report to be published, elevating the governance status. Implementation of internal controls over tax data, review processes and board reporting are critical 
  • Managing exemptions: Exemptions for Public CbC reporting will be granted in exceptional circumstances only and require prior ATO approval 
  • Wider transparency strategy: MNEs should develop a cohesive tax transparency strategy that integrates the Public CbC report, the VTTC, broader ESG initiatives and the ATO’s tax governance expectations and how to ensure consistency and comparability. Although it remains voluntary, this may include a participation strategy as to whether to adopt (or continue) the VTTC 
  • Compliance risk: Non-compliance for the Public CbC report, including failure to submit in the correct format or omitting required fields without exemption, may trigger significant penalties, including for foreign parent entities operating in Australia.

Opportunities for businesses and how BDO can help

The ATO’s draft instructions provide detailed operational guidance for Australia’s Public CbC reporting regime, aligning with global transparency standards while imposing strict compliance processes such as standardised XML submission and mandatory qualitative disclosures.

The draft instructions are open for consultation until 28 November 2025, with minor adjustments possible, but the core structure and requirements are expected to remain. MNEs should therefore begin their internal preparations promptly, coordinating tax, finance, and IT functions to meet these new obligations. 

As transparency expectations continue to rise, large businesses have an opportunity to take control of their tax narrative. The combination of Public CbC reporting and the redesigned VTTC marks a new chapter in how companies demonstrate accountability, align with community values and support stakeholder trust. 

For further information regarding Australia’s Public CbCR regime, contact your local BDO transfer pricing advisers today. To learn more about the redesigned VTTC, reach out to our corporate and international tax team.

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