OECD Implements Country-by-Country Reporting

1
Customer Care No. 91-11-45562222
OECD Implements Country-by-Country Reporting
www.taxmann.com
2

• The OECD issued new formal transfer pricing
  documentation guidance 29 June 2016 to both tax
  administrations and multinational enterprises.
  The guidance implements BEPS Action 13
  Country-by-Country document reporting. The OECD
  portrays country-by-Country reporting as offering
  a tax administration high-level transfer pricing
  risk assessment.
• Background
• The OECD and G20 counties committed themselves to
  address the Base Erosion and Profit Shifting
  (BEPS) concerns during 2013. The OECD and G20
  issued 15 BEPS Actions on October 3, 2015. Most
  BEPS Actions address specific actions or
  inactions on the part of multinational
  enterprise, but Action 13 addresses procedures
  that multinational enterprise is to undertake as
  to its transfer pricing documentation procedures.
  Action 13, then, is general rather than being
  specific, and applies to all multinational
  enterprises that meet size and timing criteria.

Customer Care No. 91-11-45562222
www.taxmann.com
3

• The OECD requires the multinational enterprise to
  undertake three transfer pricing documentation
  obligations the Master file, the local file,
  and, when applicable, country-by-country
  reporting. The OECD took its transfer pricing
  documentation approach in 2015 from the European
  Union (EU) procedures in its 2006 Code of
  Conduct. While the EU and the OECD both have a
  Master file and a local file, the
  country-by-country file is unique to the OECD.
  The OECD provided guidance specifically to
  further implement its country-by-country transfer
  pricing documentation rules.
• Implementation and Timing
• OECD and G20 countries agree that the
  country-by-country reporting system is a "key
  priority" in assessing BEPS risks. Action 13
  recommends that the tax administration for a
  particular country apply the country-by-country
  transfer pricing documentation rules for fiscal
  periods that commence anywhere in 2016, i.e.,
  fiscal periods commencing from 1 January 2016 or
  afterward. The OECD applies a EUR 750 million
  threshold, based on annual consolidated group
  revenue. The OECD is scheduled to review the
  country-by-country rules, including the threshold
  amounts, immediately after reviewing the 2020
  results.

Customer Care No. 91-11-45562222
www.taxmann.com
4

• OECD's New Country-by-Country Guidance
• The OECD addressed four specific
  country-by-country transfer pricing documentation
  guidance
• ?Multinational enterprises transitional filing
  options
• ?Country-by-country investment fund reporting
• ?Country-by-country partnership reporting
• ?Currency fluctuations and the EUR 750 million
  filing threshold
• The country-by-country template provides an
  overview of allocations for income, taxes, and
  business activities by taxing jurisdiction. The
  report lists all constituent entities within the
  multinational group. The OECD requires the
  enterprise to list, by taxing jurisdiction, the
  revenues, profits, income taxes, stated capital,
  accumulated earnings, the number of employees,
  and non-cash assets.
• Multinational Enterprises Transitional Filing
  Options
• Action 13 recognizes that some taxing
  jurisdictions might need to follow the country's
  domestic legislative process to implement the
  transfer pricing documentation rules within the 1
  January 2016 country-by-country rules. The OECD
  addressed transitional filing rules though a
  surrogate filing process. The OECD requires that
  a country seeking to employ the surrogate filing
  procedures to have in place a qualified competent
  authority agreement and a tax residence
  agreement.

www.taxmann.com
Customer Care No. 91-11-45562222
5
To read more, please click here
Customer Care No. 91-11-45562222
www.taxmann.com