Canadian and US tax officials on June 7 signed a competent authority agreement detailing the planned exchange of annual country-by-country reports on the tax affairs of multinational enterprises.
The arrangement implements action 13 of OECD/G20 base erosion profit shifting (BEPS) plan agreements, allowing the two countries’ tax agencies to exchange information about multinational firms that operate in their countries.
The goal is to provide each country’s tax administration with information needed to assess whether there is a risk that a multinational is engaging tax avoidance through transfer pricing or other means.
Information exchanged will include the MNE’s global allocation of the income, taxes paid, and other information indicating multinational’s economic activity.
The first country-by country reports will relate to fiscal years that begin on or after January 1, 2016. These reports will be exchanged within 18 months following that last day of the MNE’s 2016 fiscal year. In succeeding years, the reports must be exchanged no later that 15 months after the last day of the fiscal year.
