OECD Issues Further Guidance On CbC Reporting
The OECD has published additional guidance on the implementation of the country-by-country (CbC) reporting requirement proposed under Action 13 of its base erosion and profit shifting (BEPS) project.
The guidance, issued on November 30, addresses the following issues: how to report amounts taken from financial statements prepared using fair value accounting, how to treat a negative figure for accumulated earnings in Table 1, how to treat mergers/acquisitions/de-mergers, how to treat short accounting periods, and the definition of total consolidated group revenue.
Releasing the guidance, the OECD said: “Since the BEPS Action 13 Report was released, jurisdictions have made great efforts to establish the necessary domestic and international legal and administrative frameworks for the filing and exchange of CbC reports in accordance with the Action 13 minimum standard and the global landscape for CbC reporting by MNE groups is still evolving.”
“This initial period may be challenging for both tax administrations and MNE groups seeking to be compliant with CbC reporting, which may call for a pragmatic approach that takes into account best efforts made to comply with CbC related obligations. These challenges should diminish over time, as the global landscape for CbC reporting becomes more settled and both tax administrations and MNE groups gain in experience.”
The CbC report is one element of a new three-tiered standardized approach to transfer pricing documentation proposed under Action 13 of the base erosion and profit shifting project. Under the framework, MNEs are required to provide aggregate information annually for each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE Group. It also covers information about which entities do business in a particular jurisdiction and the business activities each entity engages in.
