Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘Cbc’

OECD CbC Consultation Document

The OECD has published its consultation document: Review of Country-by-Country Reporting (BEPS Action 13).  Comments are requested no later than March 6th.

Chapter 1 contains general topics concerning the implementation and operation of BEPS Action 13, including the MNE group experience of CbC reporting implementation by jurisdictions, the use of CbC reports by tax administrations and other aspects of BEPS Action 13, being the master file and local file.

Chapter 2 contains topics concerning the scope of CbC reporting, including the definition of an MNE group, and the level and operation of consolidated group revenue threshold.

Chapter 3 contains topics concerning the content of a CbC report, including whether aggregate or consolidated information should be provided in Table 1, whether information in Table 1 should be presented by entity rather than by tax jurisdiction, and whether additional or different information is needed.

http://www.oecd.org/tax/beps/public-consultation-document-review-country-by-country-reporting-beps-action-13-march-2020.pdf

One key item in the report is in Section 12: Should Table 1 information be presented on an entity or jurisdictional basis?  There are arguments pro and con, and this is an important item to monitor. 

OECD: CbCR update

OECD has published the December 20109 update for implementation of country-by-country reporting (CbCR).

The table of contents conveniently provides the date for the updating of the relevant sections.  The local filing section indicates a December 2019 update.

The guidance link is referenced for review.

http://www.oecd.org/ctp/guidance-on-the-implementation-of-country-by-country-reporting-beps-action-13.pdf

Tax transparency: Shell’s 2018 report

Royal Dutch Shell PLC has published their 2018 tax contribution report, including country-by-country (CbC) statistics.

Public transparency of CbC reports has been in the vision of the EU (Dec. 6, 2019 blog), although it has not yet passed.

Shell’s report reflects a proactive effort to promote global transparency, and is an exemplary model to follow.

https://reports.shell.com/tax-contribution-report/2018/servicepages/downloads/files/shell_tax_contribution_report_2018.pdf

 

OECD update: CbC reporting

OECD has updated guidelines for several aspects of Country-by-Country (CbC) reporting, including:

  • Dividends included in pre-tax book income
  • Definition of revenues and taxes paid
  • Aggregate data in one jurisdiction/eliminations
  • Accumulated earnings/loss
  • Treatment of major shareholdings / ownership by multiple groups
  • Short accounting periods
  • Parent surrogate filing

As the 2017 CbC report is almost due for US calendar-year taxpayers, it is imperative to review the OECD guidelines to ensure year-to-year consistency, with relevant statements attached for transparency.

A link to the guidelines is attached for reference.

http://www.oecd.org/tax/beps/guidance-on-the-implementation-of-country-by-country-reporting-beps-action-13.pdf

US/EU/OECD tax developments

EY’s Global Tax Alert details several important global developments worth watching:

  • Phase 2 US tax reform – individual taxes, what else?
  • OECD’s first peer review reporting on BEPS Action 13: TP Documentation and County-by-Country (CbC) reporting (attached herein for reference)
  • EU Directive on cross-border reportable arrangements, reporting to commence in 2020 although effective date will be June/July 2018.  

The reportable arrangements are a must read for international tax colleagues to understand the impact of arrangements planned for currently that may become a transparent arrangement to be reported in the EU.

The OECD CbC report is also helpful to understand the trend that CbC reports will generate ongoing, and the viewpoint of the countries that administer this process.

The OECD BEPS Actions, including CbC reporting, significantly impact international tax compliance burdens and challenges going forward.  Additionally, US tax reform still has experts deliberating their practical application, notwithstanding future legislation.

https://www.ey.com/Publication/vwLUAssets/Report_on_recent_US_international_tax_developments_-_1_June_2018/$FILE/2018G_03277-181Gbl_Report%20on%20recent%20US%20international%20tax%20developments%20-%201%20June%202018.pdf

https://read.oecd-ilibrary.org/taxation/country-by-country-reporting-compilation-of-peer-review-reports-phase-1_9789264300057-en#page1

French CbC: US certainty?

The French Parliament has announced rules for the transmission of the French Country-by-Country (CbC) reports by US MNE’s, although it is yet not 100% certain whether such rules are penalty proof or 100% certain.

As the US has not formally named France as a partner exchanging such information, these dialogues apparently continue.  Thus, all taxpayers should be monitoring this important area through year-end for future developments and additional certainty.

EY’s Global Tax Alert summarily describes the applicable procedures.

http://www.ey.com/Publication/vwLUAssets/French_Country-by-Country_Reporting_requirements_may_impact_US_multinational_groups/$FILE/2017G_07009-171Gbl_TP_FR%20CbCR%20requirements%20may%20impact%20US%20MNE%20groups.pdf

S. Africa CbC / TP requirements

The South African Revenue Service (SARS) released its final notice re: requirements for filing the Country-by-Country (CbC) report, Master File and Local File, in alignment with OECD BEPS Action Item 13.

It is interesting that, pursuant to minimum thresholds, both a Master File and Local File are required to be filed, rather than only the Local File.  This may become more of a norm, versus an exception, as the global transfer pricing and risk environment will need to be reviewed in alignment with local business operations.  Hopefully, the review will encompass confidential limitations on the information received and will only encompass transfer pricing practices of the local operations rather than extend CbC presumptions or Master File analogies against the local data.

EY’s Global Tax Alert provides the relevant details of the SARS requirement.

http://www.ey.com/Publication/vwLUAssets/South_African_Revenue_Service_releases_Public_Notice_concerning_Country-by-Country_reports_-_master_file_and_local_file/$FILE/2017G_05868-171Gbl_TP_South%20African%20RS%20releases%20Public%20Notice%20concerning%20CbCR%20master%20and%20local%20file.pdf

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