OECD Wants Broad Access For BEPS Transfer-Pricing Reports
Law360, New York (December 15, 2014, 5:52 PM ET) — Coming guidance from the Organization for Economic Cooperation and Development’s base erosion and profit shifting project on the implementation of the country-by-country reporting of financial information for transfer-pricing purposes will seek to make those reports as broadly accessible to governments as possible, an OECD official said Monday.
Guidance will be issued in February on the implementation of country-by-country reporting, and there has been a huge interest from governments, especially among developing countries, in receiving the reports as quickly as possible, according to Marlies de Ruiter, the OECD’s head of the tax treaty, transfer pricing and financial transactions division.
“I think we need to make sure these reports become accessible to as broad a group of countries as possible,” de Ruiter said, speaking during an update on the BEPS project by members of the OECD’s Centre for Tax Policy and Administration. “The intention is to make it available to all governments that need it.”
Country-by-country reporting is part of the BEPS deliverable on transfer-pricing documentation. Draft rules the OECD released in September envisioned a three-tiered approach to documentation consisting of a master file with standardized information relevant for all entities in a multinational enterprise, a local file referring specifically to material transactions by individual taxpayers, and a report for firms to disclose information on their operations in each country where they do business according to a common template.
The template for the country-by-country report agreed to by all parties to the BEPS plan will require companies to disclose profits, returns, taxes paid and accrued, the number of employees, and tangible assets for each country, as well as a list of entities in the country, de Ruiter said.
The group working on the February guidance is considering what multinational companies should be subject to the requirements and whether there should be an exception for small- and medium-size firms, according to de Ruiter. Those questions have not yet been decided, she said.
The guidance will also address the timing of the first country-by-country reports, the mechanism for government exchange of the reports, and how to ensure consistency and confidentiality in their use, de Ruiter said.
The group will finish work on the guidance in the coming weeks and submit it for approval in January, before its February release, according to de Ruiter.
Internal Revenue Service Commissioner John Koskinen said earlier this month that he is concerned about the country-by-country reporting requirements and asked the OECD to be conscientious of the practical implications of carrying out the plan. Businesses have warned that complying with the requirements could be overly burdensome.
Nevertheless, country-by-country reporting would provide governments with a wealth of information to combat cross-border tax avoidance that would allow them to gain an understanding of the global operations of multinational companies, Koskinen said.
