US, Bermuda negotiating exchange of country-by-country tax reports on multinational firms

The US is negotiating with Bermuda to annually exchange country-by-country reports on large multinational businesses, the IRS said today.

The exchange relates to a 2015 deal reached between nations resulting from the OECD/G20 base erosion profit shifting (BEPS) plan.

The BEPS agreement requires countries to obtain reports from large multinationals headquartered in their country detailing the MNE’s tax affairs worldwide and to then exchange these reports with the countries in which the multinational operates. The aim is to provide tax administrations with information they can use to determine whether a multinational operating in their country is likely to be avoiding tax.

Today’s announcement confirms that the US is seeking a bilateral competent authority agreement (CAA) with Bermuda to make these exchanges.

If the US does not reach a deal with Bermuda, under the agreed-to scheme Bermuda can still require a multinational operating there to provide the country-by-country information to it directly. As such, by entering into these agreements, the US simplifies reporting burdens for US-headquartered multinationals. The CAA would also make it easier for the US to obtain information about Bermuda-headquartered multinationals operating in the US.

The US has already concluded such CAAs with 20 countries, namely, Australia, Belgium, Brazil, Canada, Denmark, Estonia, Guernsey, Iceland, Ireland, Isle of Man, Jamaica, Latvia, Malta, Netherlands, New Zealand, Norway, Republic of Korea, Slovakia, South Africa, and the United Kingdom.

The IRS announced August 30 that it is negotiating similar deals with Colombia, Czech Republic, Finland, France, Germany, Hungary, India, Israel, Italy, Jersey, Liechtenstein, Lithuania, Luxembourg, Mauritius, Mexico, Poland, Portugal, Slovenia, Spain, and Sweden..



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