The OECD announced the activation of "automatic exchange relationships" between tax jurisdictions.
Exchange relationships will facilitate the bilateral automatic exchange of country-by-country (CbC) reports between tax jurisdictions that are signatories to the Multilateral Competent Authority Agreement (the Agreement). According to the OECD, activating automatic exchange relationships is an important step towards implementing CbC reporting under the the Agreement on the exchange of CbC reports.
The OECD confirmed that over 700 automatic exchange relationships have been established among jurisdictions committed to exchanging CbC reports in 2018.
The OECD explained that, in the coming months, more jurisdictions will nominate partner jurisdictions that they will exchange CbC reports with under the CbC Agreement. Some jurisdictions will also continue to work towards bilateral competent authority agreements for the automatic exchange of CbC reports with specific partners under income tax treaties or tax information exchange agreements.
Canada signed the CbC Agreement in May 2016.
The CbC MCAA was created so that new CbC reporting requirements could be implemented with consistency. It will also allow tax administrations to understand how multinational enterprises structure their operations and to protect confidential information.
The new CbC pricing reporting standards were developed under Action 13 of the OECD's base erosion and profit shifting (BEPS) project. Action 13 proposes to tackle international tax base erosion and profit shifting by enhancing transparency for tax administrations through providing them with adequate information so that they can conduct proper transfer pricing risk assessments and examinations.
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