The OECD’s Guidance on the implementation of country-by-country (CbC) reporting [PDF 385 KB] released today sets out:
The OECD’s base erosion and profit shifting (BEPS) project sets out 15 key actions to reform the international tax framework and to provide that profits are reported where economic activities are carried out and value created. One of the main features is the adoption of country-by-country (CbC) reporting, as set out in the BEPS recommendations on Action 13, “Transfer pricing documentation and country-by-country reporting.” Under CbC reporting, MNEs will be required to provide aggregate information annually, in each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. CbC reporting will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.
Following the endorsement of the BEPS package in November 2015, the focus has shifted to consistent implementation, including of the new transfer pricing reporting standards developed under Action 13 of the BEPS project.
The OECD guidance on “parent surrogate filing” (i.e., voluntary filing for 2016 by the parent entity) could greatly simplify reporting for 2016 by U.S. headquartered multinationals. If all the conditions are met and other countries agree, U.S. multinationals could file voluntarily with the IRS for 2016, and if the IRS exchanges that information with the relevant jurisdictions, that would satisfy the reporting requirements in those jurisdictions. The remaining hurdle is determining that there are Competent Authority Agreements in place with each jurisdiction to exchange the reports, along with a legal basis for the exchange (i.e., a treaty or tax information exchange agreement).
For more information, contact a tax professional with KPMG’s Washington National Tax:
Michael Plowgian | +1 202 533-5006 | firstname.lastname@example.org
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.