Country by Country reporting - Handbook on …

1 Country -by- Country reporting Handbook on effective implementation September 2017 This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2017), Country -by- Country reporting : Handbook on effective implementation , OECD, Paris. Photo credits: Cover MIND AND I OECD 2017 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of the source and copyright owner is given.

2 All requests for public or commercial use and translation rights should be submitted to Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at or the Centre fran ais d'exploitation du droit de copie (CFC) at PREFACE 3 Country -BY- Country reporting - Handbook ON effective implementation OECD 2017 Preface Next year will be the first time that tax authorities around the world will receive information on large MNE groups with operations in their Country , breaking down a group's revenue, profits, tax and other attributes by tax jurisdiction.

3 This information has never previously been available to tax authorities and represents a great opportunity for tax authorities to understand the structure of a group's business in a way that has not been possible before. Country -by- Country reporting (CbC reporting ) is one of the four minimum standards of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project to which over 100 countries have committed, covering the tax residence jurisdictions of nearly all large MNE groups. And the pace of implementation of CbC reporting is impressive.

4 As of today, more than 55 jurisdictions have already implemented an obligation for relevant MNEs to file CbC Reports. Jurisdictions have also moved quickly to ensure that CbCRs can be exchanged between tax administrations. To date, 65 jurisdictions have signed the Multilateral Competent Authority Agreement and some jurisdictions have entered into bilateral Competent Authority Agreements to operationalise the exchange of CbCRs with specific jurisdictions. With nine months to go until the first CbC Reports are exchanged, over 1 000 exchange relationships between pairs of jurisdictions have already been created.

5 The onus is now put on tax authorities to develop and implement solutions for the collection and handling of CbC Reports and to make effective and appropriate use of the information they contain. The Canada Revenue Agency, in the context of the OECD Forum on Tax Administration, has sponsored work on two new handbooks, to support countries in the effective implementation of CbC reporting and on the use of the information contained in CbC Reports for the purposes of tax risk assessment. The Country -by- Country reporting : Handbook on effective implementation is a practical guide to the key elements that countries need to keep in mind when introducing CbC reporting , including technical issues related to the filing, exchange and use of CbC Reports, as well as practical matters that tax authorities will need to deal with.

6 Following implementation of CbC reporting , a tax authority will then need to start using the information they receive, either from a group directly or from a foreign tax authority. The Country -by- Country reporting : Handbook on effective Tax Risk Assessment explores how this can be done, taking into account the different approaches to tax risk assessment applied in different countries, the types of tax risk indicator that may be identified using information contained in CbC Reports, and the challenges that may be faced by tax authorities and that they need to be aware of.

7 It shows that CbC Reports can be a very important tool for the detection and identification of transfer pricing risk and other BEPS-related risk in the hands of a tax administration, used alongside other information that it holds and as a basis for further enquiries, but also raises cautions about 4 PREFACE Country -BY- Country reporting - Handbook ON effective implementation OECD 2017 the risk that simplistic and misleading conclusions may be drawn if CbC Reports are used in isolation. These two handbooks will provide valuable support to countries introducing CbC reporting and using the information they receive, but we do not see these handbooks as permanent, static tools.

8 As time passes, tax authorities will gain in experience in collecting, handling and using CbC Reports and each of the handbooks will be updated periodically, to ensure that tax authorities in all countries can benefit from this experience. Bob Hamilton Commissioner of the Canada Revenue Agency TABLE OF CONTENTS 5 Country -BY- Country reporting - Handbook ON effective implementation OECD 2017 Table of contents Abbreviations and acronyms .. 7 Chapter 1 Introduction and background .. 9 A high level overview of CbC reporting .

9 9 The Country -by- Country reporting : Handbook on effective implementation .. 11 Chapter 2 The filing and use of CbC Reports .. 15 Required elements for the filing and use of CbC Reports .. 15 The definition of an MNE group, and which groups are subject to CbC reporting .. 15 The definition of a reporting entity .. 16 The definition of a reporting fiscal year .. 16 The determination of the first reporting fiscal year .. 16 The format and content of a CbC Report .. 16 The timing for filing CbC Reports .. 17 The appropriate use of CbC Reports .. 17 The confidentiality of CbC Reports.

10 18 Optional elements for the filing of CbC Reports .. 19 Surrogate entity 19 Local filing .. 20 Notification requirements .. 22 Chapter 3 The exchange of CbC 23 The CbC multilateral CAA .. 23 Essential elements of the CAAs .. 24 A commitment to exchange CbC Reports .. 25 The timing of exchange .. 25 The use of a common XML schema .. 25 The manner of transmission .. 26 Notification of non-compliance by a reporting entity .. 26 A domestic obligation for the filing of CbC Reports .. 26 Confidentiality and appropriate use .. 26 Notification of non-compliance with the conditions of confidentiality and appropriate use.