A key date for certain entities with respect to the first phase of country-by-country (CbC) reporting, as introduced in the Czech Republic, was 31 October 2017. Czech entities whose first reporting period ended before 31 October 2017 had to file a notification by 31 October 2017 informing the “specialised financial authority” which company of the group of companies would be filing the CbC report for the group.
Given that the CbC notification date has passed, a review of the filings reveals certain common errors during the first phase of the CbC reporting process.
In examining entities’ compliance with this requirement, tax professionals have noted that there were diverse and challenging situations involving multinational entity groups. In some situations, it was observed to be relatively difficult to determine the identity of the ultimate parent company. In other situations, it was challenging to initiate communication with group members unknown until that time. Consequently, the second most frequent error concerning the CbC notification process was an unclear identification of the reporting entity (i.e., the entity that would file the CbC report for the entire multinational group of companies). Although only one company—typically, the ultimate parent company—would be filing a CbC report for a group of companies, according to information from those CbC notifications received, for some groups, CbC reporting would be completed by several entities at the same time.
Another mistake that was observed was the inability of entities to distinguish the terms of ohlášení (notification) from oznámení (country-by-country report) in Czech, and thus caused an incorrect notification by a Czech entity as being the reporting entity.
Owing to the fact that CbC reporting is an entirely new duty for Czech taxpayers, the tax administrators decided to be relatively benevolent. Based on information received from the financial administration’s representatives, when the tax administrators identified errors or faults similar to those described above or of another nature, they will informally call the taxpayer to rectify the situation. If the taxpayer removes the error by the end of the calendar year, the tax authority will not penalize the taxpayers for a late filing of a notification. Still, the filing of a CbC notification is a one-off duty, as opposed to the submission of CbC reports. A new notification is only required to be filed when the notified information changes. Consequently, notifications are not required to be filed every year.
Read a December 2017 report prepared by the KPMG member firm in the Czech Republic
<p>© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.</p> <p>Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.</p>
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor 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 on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.