The OECD on June 8 released model domestic legislation and competent authority agreements to implement the transfer pricing country-by-country (CbC) reporting plan developed under the OECD/G20 base erosion profit shifting (BEPS) project.
The work furthers action 13 of the OECD/G20 BEPS plan and follows up on a framework to implement CbC reporting agreed to by OECD and G20 countries last February and in September 2014.
Under the model legislation, country-by-country reports must be filed annually by the ultimate parent of an MNE group. Filing is also required by resident subsidiaries and permanent establishments that have an ultimate parent that is not subject to country-by-country reporting; where there exists an exchange of information agreement between the countries of the subsidiary’s residence and the parent’s residence, but no competent authority agreement between the nations; or if there is a systematic failure to exchange CbC reports after agreeing to do so.
The model legislation allows a MNE to designate one subsidiary in a jurisdiction to file on behalf of all companies, and allows a surrogate parent entity to file on behalf of the ultimate parent.
Model competent authority agreements are designed to facilitate the automatic exchange of the country-by-country reports among tax administrations through tax treaties; tax information exchange agreements; or through a multilateral agreement, the Multilateral Competent Authority Agreement on the Exchange of CbC Reports.
The OECD said it would develop an XML Schema and a related user guide to accommodate electronic exchange of CbC reports.
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