On October 5, 2015, the Organisation for Economic Co-operation and Development (OECD) released a final package of 15 action items (the Actions) as part of its years’ long work on the Base Erosion and Profit Shifting (BEPS) Project for the “comprehensive, coherent and coordinated reform of the international tax rules.” In November 2015, the G-20 endorsed the 15 Actions and now, where applicable, the Actions are awaiting implementation within the legislative and regulatory bodies of each participating country.
Of the Actions, Action 13 is one that was intended to be implemented most quickly. Action 13 calls for a “three-tiered standardised approach” to transfer pricing documentation. Specifically, Action 13, when implemented, requires all multinational enterprises (MNEs) to prepare both a master file providing a high-level overview of their global operations and a local file of transfer pricing documentation specific to each country relevant to its tax return. In addition, companies with consolidated group revenue equal to or exceeding €750 million will need to prepare a country-by-country report to summarize by jurisdiction revenue, pre-tax income, income tax paid and accrued, employees, stated capital, retained earnings, and tangible assets. Action 13 recommends that countries require country-by-country reporting (CbyCR) beginning for the 2016 tax year, with those initial reports being filed in 2017.
In this Alert, we provide a country-by-country overview of CbyCR implementation progress to date in the following jurisdictions: The United States, Australia, China, France, Germany, Ireland, Netherlands, Poland, Spain, and the United Kingdom.