OECD: Update on BEPS country-by-country reporting

OECD: Update on BEPS country-by-country reporting

The Organisation for Economic Cooperation and Development (OECD) today announced that the OECD and G20 countries have reached an agreement concerning three key elements that will enable implementation of the BEPS project—one of which is an implementation package for country-by-country reporting in 2016 and a related government-to-government exchange mechanism to start in 2017.

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The other two BEPS items under the agreement with the G20 countries are:

  • A mandate to launch negotiations on a multilateral instrument to streamline implementation of tax treaty-related BEPS measures
  • The criteria to assess whether preferential treatment regimes for intellectual property (patent boxes) are harmful or not

Today’s OECD release states a key objective of the BEPS project is to increase transparency through improved transfer pricing documentation standards—including through the use of a country-by-country reporting template that requires multinationals to provide tax administrations with information on revenues, profits, taxes accrued and paid, along with some activity indicators.

New guidance presented to the G20 country leaders requires country-by-country reporting by multinationals with a turnover above €750 million in their countries of residence starting in 2016.

Tax administrations will begin exchanging the first country-by-country reports in 2017.

The OECD noted that countries have emphasized the need to protect tax information confidentiality. The guidance confirms that the primary method for sharing such reports between tax administrations is through automatic exchange of information, pursuant to government-to-government mechanisms such as bilateral tax treaties, the multilateral convention on mutual agreement assistance, or tax information exchange agreements.

In certain exceptional cases, “secondary methods”—including local filing—may be used.

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