By Julie Martin, Editor, MNE Tax
More than 90 countries have introduced laws requiring the collection of country-by-country reports on multinationals which are compliant with global tax standards, a peer review report released by the OECD on September 24 has concluded.
On the other hand, 41 jurisdictions still do not have in place a legal or administrative framework for country-by-country reporting, despite pledging to comply with the standards, the report said. Moreover, 34 countries that have a framework need to make that framework compliant, said the report, which was approved by a coalition of about 140 countries known as the “Inclusive Framework on BEPS.”
The report assessed 131 countries for compliance with “minimum standards” on country-by-country reporting set by OECD and G20 nations in 2015 as an outcome of the base erosion profit shifting (BEPS) plan.
These minimum standards were later adopted by all “Inclusive Framework on BEPS” member countries, who also agreed to be peer-reviewed for compliance with these standards. This most recent peer review did not cover all Inclusive Framework member countries because some joined the Framework late or faced capacity constraints, the OECD said in a statement.
According to the 427-page report, of the 131 countries, only 76 have a compliant framework in place for exchanging country-by-country reports with other countries, as required by the minimum standards. The report also reviewed the degree to which countries’ standards on confidentiality, consistency, and appropriate use of the reports complied with the minimum standards.
The aim of the country-by-country reporting is to give tax administrations around the world more information about the tax affairs of large multinational groups to better assess whether there is a risk that a multinational group is avoiding tax through inappropriate transfer pricing or otherwise.
The OECD said that almost all MNE groups with consolidated group revenue at or above the threshold of EUR 750 million are now covered by country-by-country reporting rules.
Moreover, the OECD noted that more than 2,500 bilateral country-by-country reporting exchange relationships are now in place. This compares to about just over 2200 such bilateral relationships in place as of September 2019.
The OECD also confirmed that, as planned, a 2020 review of the country-by-country reporting minimum standard will be completed this year, taking into account feedback received from a public consultation.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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