Tax Executives Institute (TEI) recently provided comments in response to OECD’s Consultation Document for potential changes to the Country-by-Country (CbC) reporting process.
Highlights of comments:
- Current reports should remain unchanged, as tax administrations have not yet had the experience to transform the data into an effective risk assessment tool. Additionally, report changes are not easy to implement by multinationals (MNEs)
- Multiple local filings are still required, which was not the intent of the legislation
- There should not be additional jurisdictional requirements for a Master File, such data should reside in a Local File. Additional requirements are not efficient for MNEs to provide
- The definition of “control” should be over 50% to have availability for data collection
- The reporting threshold should not be lowered
- Examples of “revenue” would be helpful
- TEI does not support providing legal entity information in Table 1
- Consolidated, vs. aggregate, reporting presents many challenges for MNEs
- Requests for additional details of reported amounts should be delayed
The OECD is currently developing a CbC reporting “Tax Risk Evaluation & Assessment Tool” (TREAT) to support tax authorities in reading and interpreting CbC reports. TEI recommends the OECD publish the TREAT to help MNEs in identifying indicators triggering questions from tax authorities (if the OECD is not otherwise planning on doing so)
What is not mentioned is the trend toward transparency of tax data, which introduces additional issues as data becomes more granular and subject to interpretation by non-tax readers of such information.