On June 29, 2016 the OECD released a Guidance on the Implementation of Country-by-Country Reporting.
One of the main outcomes of BEPS project has been the adoption of Country-by-Country (CbC) reporting, as set out in the 2015 BEPS Report 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 activities within the MNE group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.
This guidance covers the following issues:
· Transitional filing options for MNEs (“parent surrogate filing”).
· The application of CbC reporting to investment funds.
· The application of CbC reporting to partnerships.
· The impact of currency fluctuations on the agreed EUR 750 million filing threshold.
In this respect the Guidance discusses a.o. the following questions:
1. Can MNE Groups with an Ultimate Parent Entity resident in a jurisdiction whose CbC reporting legal framework is in effect for Reporting Periods later than 1 January 2016 voluntarily file the CbC report for fiscal periods commencing on or from 1 January 2016 in that jurisdiction? What is the impact of such filing on local filing obligations in other jurisdictions?
2. How should the CbC reporting rules be applied to investment funds?
3. How should a partnership which is tax transparent and thus has no tax residency anywhere be included in the CbC report? How should a reverse hybrid partnership, which is tax transparent in its jurisdiction of organisation but considered by a partner’s jurisdiction to be tax resident in its jurisdiction of organisation, be treated?
4. If Country A is using a domestic currency equivalent of EUR 750 million for its filing threshold, Country B is using EUR 750 million for its filing threshold, and as a result of currency fluctuations Country A's threshold is in excess of EUR 750 million, can Country B impose its local filing requirement on a Constituent Entity of an MNE Group headquartered in Country A which is not filing a CbC report in Country A because its revenues, while in excess of EUR 750 million, are below the threshold in Country A?
The following jurisdictions have confirmed they will have parent surrogate filing available consistent with the framework outlined above for Ultimate Parent Entities that are resident in their jurisdiction, with respect to fiscal periods commencing on or from 1 January 2016:
· Japan
· Switzerland
· United States
Click here to be forwarded to the Guidance on the Implementation of Country-by-Country Reporting as published by the OECD on June 29, 2016.
Are you looking for other BEPS documents then have a look at our BEPS LIBRARY, which is very complete.
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