Brazil, Guernsey, Jersey, the Isle of Man, and Latvia have signed a multilateral agreement which sets out the parameters for the automatic exchange between tax administrations of country-by-country tax reports on multinational enterprises.
The agreement, called the Multilateral Competent Authority Agreement for the Automatic Exchange of Country-by-Country Reports, has now been signed by 49 nations.
“I congratulate Brazil, Guernsey, Jersey the Isle of Man, and Latvia on their efforts toward implementing the [base erosion profit shifting (BEPS)] package, and on their important role in advancing greater international tax cooperation and transparency,” OECD Secretary-General Angel Gurría said.
The agreement implements action 13 of the BEPS plan, designed to provide countries with a tool to combat multinational corporation tax avoidance through transfer pricing and other means.
Under action 13 of the BEPS plan, large multinationals must report to their country of residence specified information regarding each jurisdiction in which the group operates. Such information includes revenues, profits, income tax paid, stated capital, accumulated earnings, number of employees, and tangible assets.
That information is then shared with other countries pursuant to the multilateral competent authority agreement, tax information exchange agreements, and similar agreements.
The scheme will provide tax administrations with a better understanding of the way MNEs structure their operations, allowing them to more easily determine which MNE groups should receive greater scrutiny.
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