Current Status of Country by Country Reporting Tax and Technology Conference: Vienna 9-10 February, 2016 Jeffrey Owens, Director of the WU Global Tax Policy Center Vienna, February 9 – 10, 2016

BEPS action plan: A Recap Endorsed by G20 Heads of State in November 2015

Tax transparency: an overview Exchange of Information (Eol) DTTs/TIEAs Anti-Money Laundering (AML) standards FATCA/OECD Common Reporting Standard (CRS) Tax transparency EU tax transparency package (Rulings/APAs) OECD BEPS actions 12 & 13 FATCA and Intergovernmental Agreement (IGAs) Sector initiatives: Extractive Industries Transparency Initiative (EITI) Dodd-Frank Act Support from political bodies (G20/G8) Enablement from international organisations

The transparency timeline 2009 March – May 2010 March-June 2013 March-June 2014 Feb – Mar 2015 30 January 2014 OECD Discussion Draft on BEPS Action 13  13 February 2014 OECD releases Common Reporting Standards  11 June 2014 Announcement by EC on state aid investigations 9 February 2015 Implementation guidelines for CbCR issued by OECD  18 March 2015 EC proposes for Transparency Package   19 March 2015 EC’s negotiations with Switzerland on landmark tax transparency agreement September 2009 OECD proclaims a “revolution” in transparency and exchange of tax Information 18 March 2010 FATCA signed into law  May 2010 Amendment of OECD Multilateral Convention (Mutual Administrative Assistance in Tax Matters)   29 May 2013 Australia introduces a tax bill on public report by ATO for companies with annual income of $100 million or more 13 June 2013 UK launched “Fair Tax Mark” 2003-4 2009 2010 2013 2014 2015-2017 2003 Jul – Sep 2010 June – Dec 2013 Aug – Dec 2014 Sep 2015 – 2017 June 2003 Extractive Industries Transparency Initiative (EITI) launched 21 July 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act signed into federal law  24 September 2010 US IRS releases final schedule/instructions for Schedule UTP June 2013 EC asks information about tax ruling practice  June 2013 Information request about IP-regimes from the ten EC Member States  31 December 2013 Deadline for EU Member States to transpose country by country reporting obligation for banks under CRD IV into domestic law 13 August 2014 Standard for Automatic Exchange of Information in Tax Matters (OECD)  16 September 2014 Report on BEPS Action 5 (OECD)  17 December 2014 EC extends information enquiry on tax ruling practice to all Member States September 2015: OECD BEPS Action 12 finalized November 2015: Heads of G20 endorse January 2016: MCAA signed in Paris 1 January 2016: Exchange of cross-border tax rulings/ APAs to commence under revised EU Directive on Administrative Cooperation  2016: Early adopting countries begin automatic exchange of tax information using the OECD CRS  2017: First exchange of information under CbCR, using FY2016 data 2004 2004 UK introduces Disclosure of Tax Avoidance Schemes (DOTAS)

Country by Country (CbC) Reporting TP Master file TP Local file CbC report CbC reporting: getting a good look inside What it is: Companies will have to provide tax authorities with country-specific allocation of profits, revenues, employees and assets; worldwide adoption expected by 2017, though specific adoption deadlines will vary by country. What it is not: Not intended as a substitute for a full transfer pricing analysis, nor is it intended for use in formulary apportionment-based adjustments. But it will feed into tax audits. CbC Reporting Why this early focus is needed: Because of the level of complexities involved with cross-border transactions, and data collection and management, many companies are already preparing now, testing and validating processes and technologies. 28

Master file – information required Organizational structure Business description Intangibles Intercompany financial activities Financial and tax positions Structure chart: Legal ownership Geographic location Important drivers of business profit Overall strategy description Financing arrangements for (related and unrelated) lenders Annual consolidated financial statements Supply chain of: Five largest products/ services by turnover Products/services generating more than 5% of sales List of important intangibles and legal owners Identification of financing entities List and description of existing unilateral APAs and other tax rulings Main geographic markets of above products List of important intangible agreements Details of financial transfer pricing policies List and brief description of important service arrangements R&D and intangible transfer pricing policies Functional analysis of principal contributions to value creation by individual entities Details of important transfers Business restructuring/ acquisitions/divestitures during fiscal year Master file CbC report Local file 29

CbC reporting Implementation status Non compliance is a criminal offense in the Netherlands Already implemented Implementation in progress Ireland United States France Italy Japan Mandatory for large UK parented groups only China: Filing due with tax return on 31 May Spain’s group definition based on control Does not include surrogate parent concept Equity rather than stated capital and accumulated earnings OECD BEPS project outcomes: New reporting under Action 13

Action 13:CbC reporting P Consistent with OECD recommendations OECD   OECD Australia China Denmark Finland France Status Adopted legislation on 3 December 2015, to take effect as of 1 January 2016. Draft legislation published Bill approved by parliament on 18 December 2015, to take effect as of 1 January 2016. Draft bill published on 21 December 2015. Who Ultimate Parents of group with revenue of EUR 750 million or greater Threshold of AUD 1 billion (approximately EUR 670 million) Threshold of RMB 5 billion (approximately EUR 705 million)  Threshold of DKK 5.6 billion (approximately EUR 750 million) P When For fiscal years starting in 2016, with filing within 12 months from fiscal year end To be filed together with the annual tax return (due 31 May). Possible to apply for an extension. The government intends for the provisions to be enacted and effective beginning of 2017. Secondary filing rule 1.Local filing or 2.Filing by named “Surrogate Parent” entity Local filing Filing by "next tier parent entity" Local filing Penalties Left to countries General penalty for non compliance General penalty regime. Penalties in the maximum amount of EUR 25,000. Specific penalty regime. Should not exceed EUR 100,000 Consistent with OECD recommendations

Action 13:CbC reporting P Consistent with OECD recommendations OECD   OECD Ireland Italy Japan Mexico Netherlands Status Adopted legislation applicable as of 1 January 2016 Published legislation in the Official Gazette on 30 December 2015, to apply as of 1 January 2016. Draft legislation published on 16 December 2015. Published legislation on 18 November 2015, to apply as of 1 January 2016. Who Ultimate Parents of group with revenue of EUR 750 million or greater P Revenues in excess of JPY100 billion (approximately US$820 million) Revenues in excess of 12 billion pesos (approximately EUR 650 million) When For fiscal years starting in 2016, with filing within 12 months from fiscal year end Proposed to apply to taxable years beginning on or after 1 April 2016 Secondary filing rule 1.Local filing or 2.Filing by named “Surrogate Parent” entity Local filing Penalties Left to countries Penalty applicable for not complying with tax return obligation. Specific penalty between €10,000 and €50,000 may apply. General penalties and presumptive taxation may apply in case of non-compliance. In addition to penalties, non compliant taxpayers may be disqualified from entering into contracts with the Mexican public sector. Criminal penalty for non compliance Consistent with OECD recommendations

Action 13:CbC reporting P OECD Norway Poland Spain United Kingdom   OECD Norway Poland Spain United Kingdom United States Status Published draft legislation for consultation on 2 December 2015. Adopted regulations applicable as of 1 January 2016. Adopted implementing regulations applicable as of 1 January 2016. Enabling legislation adopted. Draft regulations published. Proposed regulations published on 21 December 2015. Who Ultimate Parents of group with revenue of EUR 750 million or greater Revenues in excess of NOK 6.5 billion (approximately USD 730 million) P Threshold of £586 million (approximately EUR 790 million) Revenue of $850 million or greater When For fiscal years starting in 2016, with filing within 12 months from fiscal year end First reporting should be done in 2018 based on figures from 2016. For taxable years beginning on or after the date final regulations are published Secondary filing rule 1.Local filing or 2.Filing by named “Surrogate Parent” entity None Local filing Voluntary local filing Penalties Left to countries General penatly for non compliance. General penalty for non compliance with reporting obligations Specific penalty for non compliance General reporting-related penalties may apply

Who is the reporting entity? Group: Collection of two or more enterprises related through ownership or control such that it is required to prepare consolidated financial statements (or would be so required if publicly traded) Ultimate Parent Any local entity Surrogate Parent Top entity No other entity owns a controlling interest If country of Ultimate Parent does not require CbC reporting for the Group, or Local country is not receiving CbC report from Ultimate Parent jurisdiction Unless the Group appoints Surrogate Parent, and Local country rules allow for Surrogate Parent If country of Surrogate Parent requires CbC reporting and local country has arrangement in place to receive such information from country of Surrogate Parent, and Country of Surrogate Parent and local country both have been informed Files CbC report with tax authority where it is resident Tax authority will share with other countries under information exchange relationships Files CbC report with tax authority where it is resident Tax authority will share with other countries under information exchange relationships Files CbC report with tax authority in each such local country under country’s rules PRIMARY REPORTING SECONDARY REPORTING OECD BEPS project outcomes: New reporting under Action 13

Governments and business will have to learn to live in a transparent environment Exchange of Information (EOI) on request and rapidly moving to automatic C by C and the Master File Disclosure provisions on tax planning schemes Joined up tax administrations Are tax administrations able to use all this information and prepared to be transparent themselves? 30