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Canada: Country-by-country reporting requirements in draft legislative proposals

Country-by-country reporting in Canada

Canada’s Department of Finance released draft legislative proposals to implement certain outstanding measures that were originally announced in the 2016 federal budget, including country-by-country reporting requirements.


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The draft legislation sets out country-by-country (CbC) reporting requirements, as developed by the Organisation for Economic Cooperation and Development (OECD) and that would apply to a multinational enterprise (MNE) group that has total consolidated group revenue of €750 million or more in a fiscal year. The draft legislation provides: 

  • The CbC reporting would apply to reporting fiscal years of MNE groups that begin on or after 1 January 2016. 
  • The CbC report generally would be filed by 12 months after the last day of an MNE group's reporting fiscal year. 
  • The ultimate parent entity of an MNE group generally would be required to file a CbC report if it is resident in Canada in the reporting fiscal year. 

Constituent entity, parent entity

A Canadian-resident "constituent entity" of an MNE group also would have to file the CbC report in certain circumstances. A constituent entity is a business entity within an MNE group that is included in the group's consolidated financial statements for financial reporting purposes (or would be required to be included if equity interests in any of the group's business entities were traded on a public securities exchange). It also includes any business entity that is excluded from the MNE group's consolidated financial statements solely for size or materiality reasons.

A Canadian-resident constituent entity must file the report when:

  • The ultimate parent entity is not obligated to file a CbC report in its jurisdiction of tax residence.
  • The ultimate parent entity's tax jurisdiction does not have a qualifying competent authority agreement in effect with Canada before the CbC report for the reporting fiscal year is due.
  • The Canada Revenue Agency (CRA) has notified the constituent entity of the systemic failure of the jurisdiction of tax residence of the ultimate parent entity (i.e., it has suspended automatic exchange or has persistently failed to automatically provide CbC reports in its possession to Canada).

When there is more than one constituent entity (that is not the ultimate parent entity) of an MNE group in Canada, the draft legislation allows one constituent entities to be designated to file on behalf of other constituent entities in an MNE group.The draft legislation also allows a “surrogate parent” entity to file a CbC report, instead of the ultimate parent entity, when the surrogate parent's jurisdiction:

  • Requires filing of CbC reports
  • Has a qualifying competent authority agreement in effect to which Canada is a party
  • Is not in a position of systemic failure, and
  • Has been notified by the surrogate parent entity that it is filing as the surrogate parent entity

The draft legislation also extends the failure to file penalty to persons and partnerships who fail to file the CbC return.


Read an August 2016 report prepared by the KPMG member firm in Canada: 2016 Federal Budget - Draft Legislation Released

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