Following on the Organization for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Sharing (BEPS) initiative, the Finance Department has released draft legislative proposals on 29th July 2016 that would implement certain measures from the 2016 budget, including those addressing country-by-country reporting. The summary of draft proposals are given below:
General rule: Canada’s Department of Finance released draft legislative proposals to implement country-by-country (CbC) reporting requirement that were originally announced in the 2016 federal budget. The draft legislation sets out country-by-country (CbC) reporting requirements, as developed by the Organization for Economic Cooperation and Development (OECD) and that would apply to a multinational enterprise (MNE) group that has total consolidated group revenue of €750 million or more in a fiscal year.
Timing: As per the draft legislative proposals, the country-by-country report must be filed before the later of 12 months after the ultimate parent’s fiscal year end or within 30 days of a notification by the Minister to an MNE entity of a “systemic failure”.
Penalty for non-compliance: Penalties are set out in the draft legislation for failure to comply with the new reporting requirements. The penalties dealing with the failure to furnish foreign-based information will apply to the country-by-country report and that can reach C$12,000 per report, or C$24,000 in situations where a demand has been issued by the Minister to file the report.
