Representatives of 31 countries today signed an agreement—the Multilateral Competent Authority Agreement (MCAA)—for the automatic exchange of country-by-country reports. The MCAA is intended to allow for consistent and swift implementation of new transfer pricing reporting standards developed under Action 13 of the OECD’s base erosion and profit shifting (BEPS) project, and to allow tax administrations to understand how multinational enterprises structure their operations and to protect confidential information.
According to the OECD release, the 31 countries signing the MCAA are: Australia, Austria, Belgium, Chile, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, Mexico, the Netherlands, Nigeria, Norway, Poland, Portugal, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, and the United Kingdom.
With country-by-country reporting, tax administrations where a company operates will get aggregate information annually, starting with 2016 accounts, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the multinational enterprise (MNE) group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information will be collected by the country of residence of the MNE group, and will then be exchanged through exchange of information supported by such agreements (like the one signed today). First exchanges will start in 2017-2018 concerning 2016 information. In situations when information fails to be exchanged, the Action 13 report on transfer pricing documentation provides for alternative filing.
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