Further guidance has been issued by the OECD’s Inclusive Framework on BEPS in relation to the implementation and operation of Country-by-Country (CbC) reporting under Action 13 of the project on base erosion and profit shifting (BEPS).

This latest document incorporates updates to the existing guidance on the implementation of CbC Reporting to cover the definition of revenues; the treatment of multinational groups with a short accounting period; and how to treat the amount of income tax accrued and income tax paid that must be disclosed in the CbC report.

Definition of revenues

Revenues for the purpose of the CbC report include extraordinary income and gains from investment activities. The amount included for revenue should include all revenue, gains, income and other items shown in the financial statements in relation to profit and loss. The items shown in the income statement should be aggregated and reported as revenues in Table 1 of the CbC report. Any comprehensive income or earnings, revaluations and unrealized gains included as part of net assets on the balance sheet should not be reported as revenues in Table 1 of the report.

Income Tax Accrued and Paid

The accrued income tax for the current year shown in the CbC report is the accrued current tax expense related to taxable profits or losses for the year with respect to all the constituent entities of the group resident in the relevant jurisdiction in the year, regardless of whether the tax has actually been paid.

The figure in the CbC report for income tax paid is the amount of tax actually paid including advance payments for the current year and payments relating to previous years, regardless of whether they are under appeal. The amounts relating to accrued income tax for the current year and income tax paid on a cash basis should be shown independently.

A tax refund should be shown as part of income tax paid on a cash basis in the year when the refund is received. Different treatment may apply where the refund is treated as revenue received under the relevant accounting standard or in the data used to complete Table 1 of the CbC report. If this is the case the group should clarify in Table 3 that “tax refunds are reported in Revenues and not in Income Tax Paid (on a Cash Basis)”.

Short Accounting Period

If the multinational group has a short accounting period beginning on or after 1 January 2016 and ending before 31 December 2016 a jurisdiction may allow the reporting entity to file the CbC report under the same timelines as for groups with a fiscal year ending on 31 December 2016. This would also apply to the date by which the CbC report is to be exchanged.