On May 23, 2018 the OECD released the first peer reviews of the Country-by-Country (CbC) reporting initiative (BEPS Action 13). The OECD has compiled these peer reviews in one report.

The first annual peer review focuses mainly on the domestic legal and administrative framework, and reflects implementation as of January 2018. It is part of a phased approach which gradually monitors the domestic legal and administrative framework, the exchange of information framework, and the confidentiality and appropriate use conditions over three annual reviews (starting in 2017, 2018 and 2019). Highlights include:

·   a comprehensive examination of 95 jurisdictions that are members of the Inclusive Framework. A few jurisdictions that were recent joiners of the Inclusive Framework or that faced capacity constraints were not yet included in the process, but will be reviewed as soon as possible.

·   60 jurisdictions have already introduced legislation to impose a filing obligation on MNE Groups, thus covering almost all MNE Groups expected to be in scope. The remaining jurisdictions are working towards finalising their domestic legal framework with the support of the OECD (see www.oecd.org/tax/international-tax-co-operation-map.htm).

·   where legislation is in place, the implementation of CbC Reporting has been found largely consistent with the Action 13 minimum standard. Some jurisdictions have received recommendations for improvement on certain specific aspects of their legislation and work has already begun to bring the provisions concerned in line with the standard.

The second annual peer review, covering all members of the Inclusive Framework, was launched in April 2018. It will focus on the exchange of information aspects, as well as the confidentiality and appropriate use conditions.

Next steps

Following the first exchanges of CbC reports, work will begin on analysing how CbC reports are used by tax administrations in assessing Transfer Pricing and other BEPS-related risks. Building on the Country-by-Country Reporting: Handbook on Effective Tax Risk Assessment, released by the OECD in September 2017, this work will support jurisdictions in the effective use of CbC reports, enabling them to identify areas where the tax risk posed by an MNE Group is low and to instead focus resources on those issues where risk is greatest. Used together with other information including Transfer Pricing documentation, CbC reports will boost the tax administrations’ risk-assessment capacities.

Click here to be forwarded to the “Country‑by‑Country Reporting – Compilation of Peer Review Reports (Phase 1)” as available on the website of the OECD.

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