OECD Implements Country-by-Country Reporting Customer Care No

The OECD issued new formal transfer pricing documentation guidance 29 June 2016 to both tax administrations and multinational enterprises. The guidance implements BEPS Action 13 Country-by-Country document reporting. The OECD portrays country-by-Country reporting as offering a tax administration high-level transfer pricing risk assessment. Background The OECD and G20 counties committed themselves to address the Base Erosion and Profit Shifting (BEPS) concerns during The OECD and G20 issued 15 BEPS Actions on October 3, Most BEPS Actions address specific actions or inactions on the part of multinational enterprise, but Action 13 addresses procedures that multinational enterprise is to undertake as to its transfer pricing documentation procedures. Action 13, then, is general rather than being specific, and applies to all multinational enterprises that meet size and timing criteria. 2 Customer Care No

The OECD requires the multinational enterprise to undertake three transfer pricing documentation obligations: the Master file, the local file, and, when applicable, country-by-country reporting. The OECD took its transfer pricing documentation approach in 2015 from the European Union (EU) procedures in its 2006 Code of Conduct. While the EU and the OECD both have a Master file and a local file, the country-by-country file is unique to the OECD. The OECD provided guidance specifically to further implement its country-by-country transfer pricing documentation rules. Implementation and Timing OECD and G20 countries agree that the country-by-country reporting system is a "key priority" in assessing BEPS risks. Action 13 recommends that the tax administration for a particular country apply the country-by-country transfer pricing documentation rules for fiscal periods that commence anywhere in 2016, i.e., fiscal periods commencing from 1 January 2016 or afterward. The OECD applies a EUR 750 million threshold, based on annual consolidated group revenue. The OECD is scheduled to review the country-by-country rules, including the threshold amounts, immediately after reviewing the 2020 results. 3 Customer Care No

OECD's New Country-by-Country Guidance The OECD addressed four specific country-by-country transfer pricing documentation guidance: ♦ Multinational enterprises transitional filing options ♦ Country-by-country investment fund reporting ♦ Country-by-country partnership reporting ♦ Currency fluctuations and the EUR 750 million filing threshold The country-by-country template provides an overview of allocations for income, taxes, and business activities by taxing jurisdiction. The report lists all constituent entities within the multinational group. The OECD requires the enterprise to list, by taxing jurisdiction, the revenues, profits, income taxes, stated capital, accumulated earnings, the number of employees, and non-cash assets. Multinational Enterprises Transitional Filing Options Action 13 recognizes that some taxing jurisdictions might need to follow the country's domestic legislative process to implement the transfer pricing documentation rules within the 1 January 2016 country-by-country rules. The OECD addressed transitional filing rules though a surrogate filing process. The OECD requires that a country seeking to employ the surrogate filing procedures to have in place a qualified competent authority agreement and a tax residence agreement. 4 Customer Care No

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