BEPS: Country-by-Country Reporting Implementation

  • July 15, 2015

So much has changed in the roughly two years since the Organisation for Economic Cooperation and Development (OECD) released its Action Plan on Base Erosion and Profit Shifting (BEPS) – which remains “the most significant transnational effort in the history of international taxation,” according to the Tax Foundation. Yet, the scope of that change pales in comparison to the amount of changes multinational enterprises (MNEs) will need to implement in the coming months.

These looming changes – which include numerous issues in addition to the CbC reporting template – create significant uncertainty for MNE executive teams and tax functions. Reducing this uncertainty requires a detailed understanding of the OECD’s CbC Reporting Guidance, as well as knowledge of related confidentiality risks, CbC reporting template implementation challenges, and suggested practical planning ideas.

Tax Matters serves to alert readers to important issues and to direct them to more in-depth assessments of BEPs challenges, risks, planning practices and updates, such as BEPS Country-by Country Reporting: The Practical Impact for Corporate Tax Departments an article that I wrote featured in AICPA's Tax Adviser publication. This post marks the first in a series of BEPS topics designed to inform readers of these risks, challenges and practical approaches.

The timing of these posts is important: Last month, the OECD published its 42-page “Country-by-Country (CbC) Reporting Implementation Package.” It consists of model tax legislation and three model Competent Authority Agreements that could be used to facilitate implementation of the exchange of the CbC reporting templates. As a next step, the OECD intends to develop a User Guide to accommodate the electronic exchange of the CbC reporting templates.

Pascal Saint-Amans, director of the OECD’s Centre of Tax Policy and administration, has expressed a hope that countries will act quickly to adopt both BEPS/CbC legislation and exchange agreements requiring MNEs to file their first CbC reporting template effective for tax year 2016 or shortly thereafter. “The start of country-by-country reporting for the 2016 tax year will be an important development,” Saint-Amans asserted in a recent interview.

Many countries are already moving forward to incorporate the CbC reporting template into their compliance obligations. This gives MNE tax departments little time to react. Look for my next post where I will cover current information on the CbC reporting template along with data element requirements.

Read Bill's next post on this topic; BEPS: The CbC Reporting Template.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.

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