The UK on February 26 issued final rules requiring large UK-parented multinationals and some UK subsidiaries of large multinationals to file annual country-by-country reports to HM Revenue and Customs (HMRC).
The regulations finalize draft regulations on the topic issued last October and follow agreements reached under action 13 of the OECD/G20 base erosion profit shifting (BEPS) plan.
The reports will be shared with tax offices in other jurisdictions where the MNE operates under the BEPS plan, which is designed to give tax authorities information needed to conduct transfer pricing risk assessments and audits.
The regulations apply to UK resident parent entities of MNEs with a consolidated group turnover of €750 million (USD 819 million) or more and to top tier UK subsidiaries where the ultimate parent entity is not required by its home country to provide a country-by-country report to HMRC.
For tax years beginning after January 1, these companies must file a report detailing, in each jurisdiction in which they operate, the revenue, profit before income tax, income tax paid and accrued, total employment, capital, retained earnings, and tangible assets.
The guidance also allows multinationals with a UK presence to voluntarily file a country-by-country report with HMRC in cases where the ultimate parent is resident outside the UK and does not exchange country-by-country reports with the UK.
Legislation was introduced in section 122 Finance Act 2015 to enable HMRC to issue regulations to implement country-by-country reporting.
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