What is the deadline for CbC reporting requirements?

The OECD has recommended that countries require MNEs to file the initial country-by-country template for fiscal years beginning on or after January 1, 2016 and within one year after the close of its fiscal year. For example, a calendar-year company would be required to file its initial template for 2016 by December 31, 2017. While many countries are adopting these effective dates, there are some that are not. For example, the IRS has recently issued proposed country-by-country reporting regulations that are proposed to be effective for taxable years beginning after publication of final regulations in the Federal Register which will not be earlier than sometime in 2016. As a result, the country-by-country report will not be required before taxable years beginning on or after January 1, 2017. Thus a year later than many other countries. In addition, Japan has adopted country-by-country reporting in line with the Action 13 model template effective for tax years beginning after April 1, 2016.

As a result of these different effective dates, foreign subsidiaries of U.S. headquartered MNE’s could be required to file the CbC reporting template effective for years beginning after January 1, 2016 in any country that has adopted the secondary mechanism for requiring the report, e.g. where the country of its ultimate parent does not require filing the report.

In response to requests for comments related to the new IRS country-by-country proposed regulations, a number of U.S. corporations have asked that they be permitted to adopt country-by-country reporting earlier than January 1, 2017. In this way, they will avoid having to file multiple CbC templates in each country that has adopted the secondary mechanism requiring the filing of the report by resident entities. It is unclear at this point whether the IRS will permit such early adoption. If the IRS does not, U.S. based MNE’s that have a subsidiary in the Netherlands (that has adopted country by country reporting effective January 1, 2016) might consider designating one of their Dutch entities as a surrogate to avail themselves of the extensive Dutch treaty network for purposes of exchanging the country-by-country report and avoid having to file the report locally in many different countries.

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Bob Norton

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Bob Norton, Specialist Leader at Deloitte, was formerly Chief Income Tax Officer in the Chief Tax Office (CTO) of Vertex, Inc. Bob has more than 30 years of corporate tax, accounting and technology experience from both public accounting and global industry. Prior to working at Vertex, Bob held several senior financial management positions running global tax, treasury, and merger and acquisition functions for Siemens' Medical IT division. Bob is a noted author and speaker and sits on the Editorial Advisory Board of Financial Executives magazine and is a member of FEI, the Tax Council, AICPA, PICPA, and the Association for Computers and Taxation.  He is a CPA and received a B.S. in Accounting from the Pennsylvania State University and an M.S. in Taxation with honors from Villanova University.

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