For many entities, country-by-country (CbC) report filings are due by December 31, 2017.
This deadline affects certain multinational enterprise groups (MNE) with December 31, 2016 fiscal year-end dates. Also, in some circumstances, Canada (or other tax jurisdictions) may require entities to file a CbC report for an MNE where there is no exchange relationship in effect, even if the MNE has filed its report in another jurisdiction.
Which CbC reports do you need to file?
Some MNEs may need to file a Canadian CbC report, even if their parent entity also files in another jurisdiction. For example, a Canadian CbC report may still be required if an MNE group has a Canadian-resident constituent entity and if Canada does not have an agreement in effect for the automatic exchange of country-by-country reports with the jurisdiction where the group has filed its CbC report. Similar rules may apply in other jurisdictions in which the MNE operates.
Although Canada has activated a number of exchange agreements with various jurisdictions, some will only be coming into effect for taxable periods starting on or after January 1, 2017 (and are therefore not effective for the December 31, 2016 fiscal year-end). Therefore, constituent entities of MNEs that file CbC reports in these jurisdictions may still have to file a Canadian CbC report. Similarly, if an MNE files a CbC report in Canada, it still needs to confirm what filing obligations it may have (if any) in other jurisdictions it operates in.
Country-by-country reporting requires certain MNEs to provide aggregate information annually across their tax jurisdictions. The information required concerns the company's global allocation of income, taxes paid and other data. Information in the report will also include data on which entities do business in a particular jurisdiction and the business activities each entity engages in.
Canada's country-by-country reporting rules and definitions are set out in section 233.8 of the Act and apply for fiscal years beginning after 2015.
Multilateral Competent Authority Agreement
The Multilateral Competent Authority Agreement provides for the automatic exchange of CbC reports and was created so that new CbC reporting requirements could be implemented with consistency. It will also allow tax administrations to understand how MNEs structure their operations and to protect confidential information. Canada signed the Multilateral Competent Authority Agreement in May 2016 and has activated the agreement with 37 jurisdictions, however some activated agreements are not effective for taxable periods until taxable periods starting on or after until January 1, 2017.
In addition to the Multilateral Competent Authority Agreement, there are also exchange mechanisms including Double Tax Conventions and Tax Information Exchange Agreements.
For more information, contact your KPMG adviser.
Information is current to December 12, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500