US negotiating exchange of country-by-country tax reports with 20 more nations

by Julie Martin

The US IRS is negotiating with 20 countries to annually exchange country-by-country reporting data on large multinational firms, the IRS said August 30.

Included on the list of countries negotiating with the US are Colombia, Czech Republic, Finland, France, Germany, Hungary, India, Israel, Italy, Jersey, Liechtenstein, Lithuania, Luxembourg, Mauritius, Mexico, Poland, Portugal, Slovenia, Spain, and Sweden, the IRS said.

The IRS said that each country has satisfied US requirements for safeguarding data and infrastructure and has consented to be listed.

The exchange of country-by-country reporting data will be accomplished through bilateral competent authority arrangements (CAAs) in situations where the US has an underlying tax treaty or other tax information exchange agreement with a nation.

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.

This scheme for the exchange of country-by-country reporting data was part of a 2015 deal reached between nations resulting from the OECD/G20 base erosion profit shifting (BEPS) plan.

The arrangement is designed to give tax authorities a fuller picture of multinational firm operations, providing new tool to discover which multinational firms are likely to be engaging in tax avoidance through transfer pricing or other means.

The CAAs require the US to exchange data on the worldwide operations of US-headquartered multinationals that have group annual revenue of USD 850 million or more.

However, if the US does not reach a deal with another country to make the exchange, under the agreed-to scheme, the country can still require the multinational to provide the information directly. As such, by entering into these agreements, the US simplifies reporting burdens for US-headquartered multinationals.

The agreements also make it easier for the US to obtain key information about large foreign multinationals operating in the US.

The IRS said that it was unable to provide assurances that CAA agreements will eventually be reached with any of the countries.

Julie Martin

Julie Martin

Founder & Editor at MNE Tax

Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.

Martin has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.

Julie Martin


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