TO promote transparency
in international tax matters, the OECD has released its standardised
electronic format for the exchange of Country-by-Country (CbC) Reports
between jurisdictions – the CbC XML Schema – as well as the related User
Guide. The CbC XML Schema is part of the OECD’s work to ensure the swift
and efficient implementation of the BEPS measures, endorsed by G20 Leaders
as part of the final BEPS package in November 2015.
The OECD/G20 BEPS Project sets out 15 key actions to reform the international
tax framework and ensure that profits are reported where economic activities
are carried out and value created. The BEPS Project delivers solutions for
governments to close the gaps in existing international rules that allow
corporate profits to "disappear" or be artificially shifted to
low or no tax environments, where companies have little or no economic activity.
CbC Reports, to be electronically transmitted between Competent Authorities
in accordance with the CbC XML Schema, will assist tax administrations in
obtaining a complete understanding of the way in which Multinational Enterprises
(MNEs) structure their operations, by annually providing them with key information
on the global allocation of income and taxes paid, together with other indicators
of the location of economic activity within the MNE group. It will also cover
information about which entities do business in a particular jurisdiction
and the business activities each entity engages in.
The information to be included in the CbC Report will be collected by the
country of residence of the Reporting Entity for the MNE group, and will
then be exchanged under the relevant international exchange of information
agreement, in particular the Multilateral Competent Authority Agreement on
the Exchange of CbC Reports (the "CbC MCAA"), in the format of
the CbC XML Schema. First exchanges of CbC Reports will start in 2018, with
information on the year 2016. The Country-by-Country reporting template does
not apply to groups with annual consolidated revenue in the immediately preceding
fiscal year of less than EUR 750 million.
The CbC XML Schema User Guide further explains the information required to
be included in each data element to be reported. It also contains guidance
on how to make corrections of data element within a file.
While the CbC XML Schema has been primarily designed to be used for the automatic
exchange of CbC Reports between Competent Authorities, the CbC XML Schema
can also be relied upon by Reporting Entities for transmitting the CbC Report
to their tax authorities, provided the use of the CbC XML Schema is mandated
domestically.
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