Action 13 Country-by-Country Reporting

Minimum Standard

Under BEPS Action 13, all large multinational enterprises (MNEs) are required to prepare a country-by-country (CbC) report with aggregate data on the global allocation of income, profit, taxes paid and economic activity among tax jurisdictions in which it operates. This CbC report is shared with tax administrations in these jurisdictions, for use in high level transfer pricing and BEPS risk assessments.

Action overview

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What is the issue?

The lack of quality data on corporate taxation has been a major limitation to measuring the fiscal and economic effects of tax avoidance, making it difficult for authorities to carry out transfer pricing assessements on transactions between linked companies and even more difficult to carry out audits.

What are we doing to solve it?

The BEPS Action 13 report (Transfer Pricing Documentation and Country-by-Country Reporting) provides a template for multinational enterprises (MNEs) to report annually and for each tax jurisdiction in which they do business the information set out therein. This report is called the Country-by-Country (CbC) Report.

To facilitate the implementation of the CbC Reporting standard, the BEPS Action 13 report includes a CbC Reporting Implementation Package which consists of (i) model legislation which could be used by countries to require the ultimate parent entity of an MNE group to file the CbC Report in its jurisdiction of residence including backup filing requirements and (ii) three model Competent Authority Agreements that could be used to facilitate implementation of the exchange of CbC Reports, respectively based on the:

  1. Multilateral Convention on Administrative Assistance in Tax Matters;
  2. Bilateral tax conventions; and
  3. Tax Information Exchange Agreements (TIEAs).

What are the results so far?

Fifty eight jurisdictions required or permitted the filing of CbC reports for 2016 and currently almost 80 jurisdictions have law in place introducing a CbC reporting obligation. In addition, over 2000 relationships are in place for the exchange of CbC reports between jurisdictions. This means that substantially every MNE with consolidated group revenue of at least EUR 750 million is already required to file a CbC report, and the gaps that do remain are closing.

The first exchanges of CbC reports took place in June 2018 and, with the OECD’s support, tax administrations are incorporating CbC reports into their tax risk assessment and assurance processes to understand better the risks posed to their jurisdictions. CbC reports are also at the heart of other programmes to provide greater tax certainty to MNEs, including the pilot for the OECD International Compliance Assurance Programme (ICAP).

Key facts

80 countries

have introduced CbC reporting filing obligation

2,000

bilateral relationships exist for the exchange of CbC reports

120 countries

will be covered in the second annual peer review process

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Discover the international state of play with this interactive map presenting key indicators and outcomes of the OECD's work on international tax matters.

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Action specific content

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Implementation of CbC reporting obligations by Inclusive Framework members

This provides an overview for MNEs and tax administrations as to which members of the Inclusive Framework have introduced a CbC reporting obligation and basic facts concerning when these obligations come into effect and how they operate. 

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Guidance and handbooks

The OECD's Inclusive Framework on BEPS has released a number of guidance and handbooks to assist and give greater certainty to tax administrations and MNE Groups alike in on the implementation and operation of Country-by-Country (CbC) Reporting (BEPS Action 13).

Guidance on the implementation of CbC Reporting

As jurisdictions have moved into the implementation stage, some questions of interpretation have arisen. In the interests of consistent implementation and certainty for both tax administrations and taxpayers, the Inclusive Framework on BEPS has issued guidance to address certain key questions. This guidance is periodically updated. Also available is a compilation of the approaches adopted by jurisdictions, in cases where guidance provides flexibility.

Guidance on the appropriate use of information contained in CbC Reports

One of the conditions for receiving and using CbC Reports is that a jurisdiction must have in place the necessary framework and infrastructure to ensure the appropriate use of CbCR information. To assist jurisdictions in complying with this condition, the OECD has released guidance on the meaning of "appropriate use", the consequences of non-compliance with the appropriate use condition and approaches that may be used by tax authorities to ensure the appropriate use of CbCR information.

Handbook on Effective Implementation

Country-by-Country Reporting: Handbook on Effective Implementation is a practical guide to assist countries in implementing CbC Reporting in line with the Action 13 minimum standard. This includes chapters on the filing and use of CbC Reports, the exchange of CbC Reports, operational aspects of CbC Reporting and guidance, stakeholder engagement and training.

Handbook on Effective Tax Risk Assessment

Country-by-Country Reporting: Handbook on Effective Tax Risk Assessment supports countries in the effective use of CbC Reports by incorporating them into a tax authority's risk assessment process. The handbook explores the advantages CbC Reports offer over other sources of data for risk assessment, how CbC Reports may be used by a tax administration to risk assess MNE groups including some of the tax risk indicators that may be identified, a number of challenges tax administrations may face in using CbC Reports and how these may be addressed, and other data sources that should be used alongside CbC Reports, where available.

All reports

Activated relationships for the exchange of CbC reports

As of August 2019, there are over 2200 bilateral exchange relationships activated with respect to jurisdictions committed to exchanging CbC reports, and the first automatic exchanges of CbC reports took place in June 2018. These include exchanges between the 80 signatories to the CbC Multilateral Competent Authority Agreement, between EU Member States under EU Council Directive 2016/881/EU and between signatories to bilateral competent authority agreements for exchanges under Double Tax Conventions or Tax Information Exchange Agreements, including 40 bilateral agreements with the United States. Jurisdictions continue to negotiate arrangements for the exchange of CbC reports and the OECD will publish regular updates, to provide clarity for MNE Groups and tax administrations.

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The CbC Multilateral Competent Authority Agreement

The multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Convention), by virtue of its Article 6, requires the Competent Authorities of the Parties to the Convention to mutually agree on the scope of the automatic exchange of information and the procedure to be complied with. Against that background, the multilateral Competent Authority Agreement on the Exchange of CbC Reports (CbC MCAA) has been developed, based on the Convention. In addition, two further model competent authority agreements have been developed for exchanges of CbC Reports, one for exchanges under Double Tax Conventions and one for exchanges under Tax Information Exchange Agreements.

The purpose of the CbC MCAA is to set forth rules and procedures as may be necessary for Competent Authorities of jurisdictions implementing BEPS Action 13 to automatically exchange CbC Reports prepared by the Reporting Entity of an MNE Group and filed on an annual basis with the tax authorities of the jurisdiction of tax residence of that entity with the tax authorities of all jurisdictions in which the MNE Group operates. A particular bilateral relationship under the CbC MCAA becomes effective only if both jurisdictions have the Convention in effect, have filed the required notifications under Section 8 and have listed each other.

List of signatories

Action specific content

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The CbC XML schema for the exchange of CbC reports

In September 2017, the OECD updated its standardised electronic format for the exchange of CbC Reports between jurisdictions – the CbCR XML Schema – as well as the related User Guide. The updated CbC XML Schema and User Guide now allows MNE Groups to indicate cases of stateless entities and stateless income, as well as to specify the commercial name of the MNE Group. Furthermore, certain clarifications have been made, in particular with respect to the correction mechanisms.

A dedicated XML Schema and User Guide have also been developed to provide structured feedback on received CbC information. The CbCR Status Message XML Schema will allow tax administrations to provide structured feedback to the sender on frequent errors encountered, with a view to improving overall data quality and receiving corrected information, where necessary.

Peer review & monitoring

The Country-by-Country Reporting requirements form one of the four BEPS minimum standards.  Each of these minimum standards is subject to peer review in order to ensure timely and accurate implementation and thus safeguard the level playing field. All members of the Inclusive Framework on BEPS commit to implementing the Action 13 minimum standard on CbC reporting, and to participating in the peer review.

In February 2017, the OECD released the terms of reference and methodology for the peer review of the Action 13 minimum standard for CbC reporting: BEPS Action 13 on Country-by-Country Reporting, Peer review documents, approved by the Inclusive Framework on BEPS. The peer review will be conducted by an ad hoc group comprising delegates of both Working Party 6 and Working Party 10, under the aegis of the Inclusive Framework, in accordance with these terms of Reference and methodology. All members will participate on an equal footing.

The first annual peer review, which focused mainly on the domestic legal framework of each reviewed jurisdiction, was carried out from February 2017 to February 2018. The first annual peer review report which includes the results of this process was approved by the Inclusive Framework in April 2018 and was subsequently published on 23 May 2018.

The second annual peer review was launched in April 2018 and is expected to be completed in the second quarter of 2019.

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