The OECD today released a new methodology for judging whether 137 countries and their tax administrations have met minimum standards on country-by-country reporting for large multinational businesses.
The country-by-reporting standards were agreed to by OECD and G20 nations in 2015 as a result of the base erosion profit shifting (BEPS) plan. The goal is to provide tax administrations with more information about the tax affairs of large multinational groups to allow them to better assess if there is a risk that a multinational is avoiding tax through inappropriate transfer pricing or through other means.
The country-by-country reporting standards were later adopted by the OECD-led “Inclusive Framework on BEPS,” which is now comprised of 137 countries. As a condition of joining the Inclusive Framework, countries must agree to be peer review on their compliance with those standards.
The standards require countries to establish the domestic legal and administrative framework for country-by-country reporting, to create a mechanism to exchange information on the reports, and to adhere to rules requiring that the data in the country-by-country reports be kept confidential and used appropriately.
According to an OECD release, the country-by-country reporting terms of reference are unchanged from the original mandate. The guidance released today sets out new criteria for assessing the implementation of the minimum standard, and the procedural mechanism by which jurisdictions can complete the peer review from 2020 onwards.
Included also is the process for collecting the relevant data, the preparation and approval of reports, the outputs of the review and the follow-up process, the OECD said.
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