OECD releases more country-by-country reporting guidance for large multinationals

by Davide Anghileri

The OECD, on April 6, issued updated tax guidance on country-by-country reporting of multinational group tax information under OECD/G20 base erosion profit shifting (BEPS) Action 13.

The aim of the document is to make certain that country-by-country reporting is implemented consistently across the globe to ensure a level playing field between countries, to provide certainty for taxpayers, and to give tax authorities a tool that increases their ability in risk assessment work, the OECD says. Countries are now implementing the standards provided by BEPS Action 13.

The additional guidance clarifies several interpretation issues related to the data to be included in the country-by-country report. It also addresses the application of the model legislation contained in the Action 13 report to assist jurisdictions with the introduction of consistent domestic rules.

The country-by-country reporting guidance clarifies that revenues should include extraordinary income and gains from investment activities. Moreover, it elaborates on the meaning of “related party” for purposes of completing Table 1 of the country-by-country report.

Furthermore, the guidance specifies that a group can use the consolidation rules of accounting standards already used by the group if the equity interests of the ultimate parent entity are traded on a public securities exchange. Other options are provided for in cases where equity interests of the ultimate parent entity are not publicly traded.

The OECD clarifies that a minority interest held by unrelated parties in a constituent entity should be taken in account in the previous year’s consolidated group revenue only if the rules of the country of the ultimate parent entity requires it.

The report also states that countries that compute the threshold for country-by-country reporting in a currency other than in euros should not periodically revise their computations to reflect currency fluctuations. The OECD specifies that a company’s threshold may be reviewed in 2020.

Total consolidated group revenue comprises all the revenue that would be reflected in the consolidated financial statement, including the extraordinary income and gains from investment activities if those items are presented in the consolidated financial statements under applicable accounting rules of the ultimate parent entity. Specific options are provided for financial entities.

Moreover, the OECD clarifies issues related to the filing options and reporting notification requirements for MNEs during the transitional phase.

Davide Anghileri

Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.

Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues. He can be reached at danghileri@yahoo.it.

Davide Anghileri


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