The OECD has announced that on 27 January 2016, 31 countries signed the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of Country-by-Country (CbC) reports. The aim of the MCCA is to enable consistent and swift implementation of the CbC reporting recommendations which arose from Action 13 of the OECD’s base erosion and profit shifting (BEPS) action plan. The OECD list the 31 countries as: Australia, Austria, Belgium, Chile, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, Mexico, Netherlands, Nigeria, Norway, Poland, Portugal, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland and United Kingdom.
The automatic exchange of CbC reports is a key part of BEPS Action 13, and should reduce the compliance burden for multinational enterprises that might otherwise have multiple filing obligations. More countries are expected to sign up to the MCAA over the coming months, while others may rely on existing arrangements contained in bilateral tax treaties or Tax Information Exchange Agreements.
First exchanges will start in 2017-2018 on 2016 information, depending on local implementation of CbC reporting requirements. In case information fails to be exchanged, the Action 13 report provides for alternative filing so that the playing field is levelled – although again this will depend on how the OECD recommendations are implemented in each territory.
The MCCA requirements are consistent with a move by the European Commission to press for automatic exchange of CBCR, as set out in their proposals presented on 28 January, although it is noted that the Commission goes further in not precluding the future introduction of public disclosure.