The US government has announced that it signed a competent authority agreement with the Cayman Islands to exchange country-by-country tax reports on multinational firms.
The agreement, signed March 8, will greatly simplify existing tax reporting burdens of large multinationals headquartered in the two countries.
The country-by-country reporting system was established in the 2015 OECD/G20 base erosion profit shifting (BEPS) plan agreements. It is designed to help tax authorities determine if a there is a risk that a multinational enterprise operating in their country is engaging in tax avoidance through transfer pricing or other means. Both the US and Cayman Islands are members of the “Inclusive Framework on BEPS,” a coalition of 113 countries that have pledged to implement country-by-country reporting.
The US has already concluded such competent authority agreements to exchange country-by-country reports with 34 countries and is in negotiations with 10 others.
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