Country by Country Reporter
The CbC report provides tax authorities with a deeper understanding of the MNE's transfer pricing practices and potential profit shifting, allowing for more effective tax risk assessments and audits.
The MNE Country by Country solution provides a fully automated system to support MNE's compliance with the OECD’s Country by Country reporting initiative. It helps MNEs with revenues over €750 million to collect baseline data and convert it into the appropriate jurisdiction-specific reporting schema.
What is CbC
Country-by-Country (CbC) reporting is an important element of the Base Erosion and Profit Shifting (BEPS) Action Plan implemented by the Organisation for Economic Cooperation and Development (OECD).
Goal
The objective of CbC reporting is to provide tax authorities with a clear picture of the global allocation of income, taxes paid, and other indicators of economic activity of MNEs. This information can be used by tax authorities to identify potential profit shifting and other tax risks within MNEs, and to facilitate more effective tax risk assessments and audits.
Purpose
CbC Reporting has become an important element of the international tax framework, with more than 100 countries having adopted this measure in their tax regulations. This has created a more transparent and equitable environment for taxpayers and strengthened countries' capacity to combat tax evasion and promote tax fairness.
Background
The BEPS Action Plan was launched by the OECD in 2013, in response to concerns that some MNEs were engaging in aggressive tax planning practices to shift profits to low-tax jurisdictions, resulting in a misalignment of profits and economic activity. The BEPS Action Plan aims to provide a coordinated international response to this issue, by developing and implementing a range of measures to address base erosion and profit shifting.
Requirements
The CbC reporting requirements apply to MNEs that have consolidated group revenue of €750 million or more in the preceding fiscal year. These MNEs are required to file a CbC report with the tax authorities in the jurisdiction where the ultimate parent entity is resident. The CbC report must be filed within 12 months of the end of the fiscal year to which it relates.
Benefits
The benefits of CbC reporting include increased transparency and accountability of MNEs, and more effective tax risk assessments and audits by tax authorities. CbC reporting provides tax authorities with a clear picture of the global allocation of income, taxes paid, and other indicators of economic activity of MNEs, making it easier for them to identify potential profit shifting and other tax risks within MNEs.
