Tony Gorgas discusses the adoption of Country by Country (CbC) Reporting in ASPAC countries.
More ASPAC countries have adopted Country by Country (CbC) Reporting over the past year, and the filing deadline for the first CbC report is drawing ever closer. The first reports due to be filed by 31 May 2017 in China, by 30 November 2017 in India and by 31 December 2017 in a number of countries (Australia, Indonesia and Korea).
|ASPAC Countries included in survey||Has adopted (or is in the process of adopting) CbC Reporting||Filing due date of 1st CbC Report|
|Australia||Yes||31 December 2017|
|China||Yes||31 May 2017|
|India||Yes||30 November 2017|
|Indonesia||Yes||31 December 2017|
|Japan||Yes||31 March 2018|
|Korea||Yes||31 December 2017|
|Malaysia||Yes||31 December 2018|
|New Zealand||Considers current law sufficient to implement CbC Reporting||No specific date in any sources|
|Philippines||No announcement as at end of May 2017||n/a|
|Singapore||Yes||31 December 2018|
|Sri Lanka||No announcement as at end of May 2017||n/a|
|Taiwan||Yes||Not yet announced|
|Thailand||No announcement as at end of May 2017||n/a|
|Vietnam||Yes||30 September 2017|
(Source: International Taxation Review Asia Transfer Pricing supplement (9th edition).)
Note: The dates indicated in the above table reflect the earliest possible filing date for the first CbC report that applies in each country. The actual filing date of the first CbC report for a particular taxpayer may be later than the date indicated for a particular country due to a different accounting or reporting period applying to the taxpayer.
Note: Above information is based on the tax regulations for the countries included as updated on or after 1 May 2017.
Further, and notwithstanding the guidance provided by the Organisation for Economic Co-operation and Development (OECD), and by individual countries to facilitate the swift and uniform implementation of CbC Reporting, implementation issues of an interpretative and practical nature continue to arise.
The introduction of CbC Reporting is, however, only one issue to consider. For multinational enterprises (MNEs), two other common themes could have equally significant, if not more significant, implications. First, a number of ASPAC countries have recently been, or are in the process of, updating their transfer pricing rules and associated administrative guidance to align them more closely with the OECD/G20’s Base Erosion and Profit Shifting (BEPS) project outcomes. Second, there is also evidence that the tax administrations in a number of ASPAC countries have been significantly ramping up their transfer pricing compliance activities, underpinned in a number of countries by an increase in staff.
In addition, it is the case that at least one ASPAC country is considering following the path of countries like the United Kingdom and Australia and taking unilateral action that is not consistent with the OECD/G20 BEPS project. In this respect, the New Zealand government released a series of consultation papers in March 2017 that propose, amongst other things, the adoption of a permanent establishment avoidance rule with elements broadly based on the Diverted Profits Tax in the United Kingdom and Australia’s Multinational Anti-Avoidance Law.
Will other ASPAC countries consider going down similar paths? Only time will tell. However, MNEs should not overlook the prospect that unilateral action by countries in the area of transfer pricing could lead to double taxation that is not able to be relieved under tax treaties.
Clearly we’re on the cusp of a brave new transfer pricing world!
This article was originally published in the International Taxation Review Asia Transfer Pricing supplement (9th edition).