Strategizing Multinational Tax Risks

Thirty-one countries have signed the OECD’s multilateral competent authority agreement (MCAA) for the automatic exchange of country-by-country (CbC) reports, excluding the U.S.

The signatory countries are:

1. Australia
2. Austria
3. Belgium
4. Chile
5. Costa Rica
6. Czech Republic
7. Denmark
8. Estonia
9. Finland
10. France
11. Germany
12. Greece
13. Ireland
14. Italy
15. Japan
16. Liechtenstein
17. Luxembourg
18. Malaysia
19. Mexico
20. Netherlands
21. Nigeria
22. Norway
23. Poland
24. Portugal
25. Slovak Republic
26. Slovenia
27. South Africa
28. Spain
29. Sweden
30. Switzerland
31. UK

The position of the US, noticeably absent from the list,  is to enter into bilateral agreements with appropriate countries that have safeguards and governance in place, as well as countries that have an income tax treaty or tax information exchange agreement in effect.

OECD BEPS Action 13 provided models for the recommended CbC reporting options; a multilateral agreement, a double tax convention model and a model based on a tax information exchange agreement.

It will be critical to monitor the development of the CbC exchange process, in addition to timing mismatches and the necessity to identify a surrogate country, with additional complexities to consider.