UK and International Tax news

OECD And Automatic Sharing Of CbC Reporting Information Update

Monday 16th May 2016

The OECD confirmed last week that Canada, Iceland, India, Israel, New Zealand and China have signed the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of Country-by-Country reports [CbCRs], bringing the total number of signatories to 39 countries.

The CbC MCAA allows all signatories to bilaterally and automatically exchange CbCRs with each other, as contemplated by Action 13 of the BEPS Action Plan. It will help ensure that tax administrations obtain a complete understanding of how MNEs structure their operations, while also ensuring that the confidentiality of such information is safeguarded.

CbC reporting requires MNEs to provide aggregate information annually, in 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 will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.

The information will be collected by the country of residence of the MNE group, and will then be exchanged through exchange of information supported by such agreements.  First exchanges will start in 2017-2018 on 2016 information. In case information fails to be exchanged, the Action 13 report on transfer pricing documentation provides for alternative filing so that the playing field is levelled.

In addition to the MCAA signing ceremony, Israel and the Russian Federation joined the 80 current signatories to the CRS MCAA, the key international framework agreement for putting in place the automatic exchange on offshore financial accounts foreseen by the OECD Common Reporting Standard.

If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

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