In October 2022 the OECD published some updates to the Guidance on the Implementation of Country-by-Country Reporting under Action 13 of the action plan on base erosion and profit shifting (BEPS).
Additional sections of guidance were added in relation to the issue of when amounts entered in Table 1 should be positive or negative; the reporting of information on permanent establishments; and the treatment of shorter or longer accounting periods.
Positive or negative amounts
A table is provided in the guidance to indicate the amounts that should be entered as positive or negative figures in Table 1 of the Country by Country (CbC) report. For example, where the sum of profits and losses of all Constituent Entities in a jurisdiction is an overall net profit, the profit before income tax should be entered as a positive amount. Otherwise, if there is an overall net loss, this should be shown as a negative amount. Similar treatment would apply to unrelated party revenues, related party revenues and total revenues which should be positive unless the amounts in the financial statements (or other accounts used as a source for the Table 1 figures) are negative, in which case they should be included as negative amounts.
In the case of income tax paid in the current year, if there is a net payment of income tax this should be shown in Table 1 as a positive amount. Where there is a net refund, this should be shown as a negative amount. An exception to this would be permitted if the refund is treated as revenue in the financial statements (or other source of data) used as a basis for the Table 1 amounts.
The stated capital, employee numbers and tangible assets other than cash and cash equivalents would always be positive amounts.
Permanent Establishment information
According to the new guidance on reporting permanent establishment (PE) information, a PE should be reported on Table 2 under the jurisdiction in which it is situated, with a note of the legal entity of which it is a part. So, if XYZ corp, a legal entity resident in Country A, has a permanent establishment in Country B, the PE will be listed in Table 2 as situated in Country B, but described as a PE of XYZ corp of Country A.
Longer or shorter accounting periods
A new section added to section 3 on shorter or longer accounting periods clarifies the information to be included in Table 1 and Table 2 of the report if a reporting fiscal year is longer or shorter than twelve months.
The BEPS action 13 report provides that generally the CbC report template should cover the fiscal year of the reporting multinational group. For the constituent entities of the group the template should reflect on a consistent basis either:
• information for the fiscal year of the relevant constituent entities ending on the same date as the fiscal year of the reporting group or ending within the twelve-month period preceding such date; or
• information for all the relevant constituent entities reported for the fiscal year of the reporting group.
If the reporting multinational group chooses to apply the first approach, some of the information on constituent entities included in Table 1 may relate to a period that is not the same as the fiscal year of the reporting group.