On 9 March 2020 the OECD published comments received from interested parties on the consultation on country by country reporting. The consultation was launched in relation to the 2020 review of the CbC reporting rules provided for by the OECD as part of the follow-up work from action 13 of the action plan on base erosion and profit shifting (BEPS).

The consultation document was issued on 6 February 2020 and invited comments on any modifications that could be made to the CbC reporting requirements; the appropriateness of the revenue threshold for groups to be required to prepare the CbC report; the scope and content of CbC reports; the effectiveness of the mechanisms in relation to filing and exchange of the reports; and the efficiency of the implementation of the measures included in BEPS action 13.

The information in CbC reports is used by tax administrations to assess the risk that multinational groups are avoiding tax by profit shifting involving inappropriate transfer pricing or other mechanisms.

The OECD received 79 responses to the consultation. The OECD has published the responses in alphabetical order but the first response is from a group of 33 US senators. The senators suggest that the standard on CbC reporting should be strengthened and that public disclosure of the CbC reports should be required. They express concern at methods used by large multinationals to shift profits to low tax countries and they quote IRS figures suggesting that USD 32 billion of profits were booked by US corporations in Bermuda in 2017 although only 547 employees were located there.

The senators also note that a lower threshold for CbC reporting would allow improved tax administration and enforcement, especially in developing countries where a small number of very large corporations may be operating. The senators note that investors face heightened risk when they are not properly informed about a corporation’s tax strategy and that policymakers, investors and citizens would benefit from more transparency.

The BEPS Monitoring Group, a network of tax experts set up by a number of civil society organisations, points out that the complex system for delivery of the reports to home countries and the control over distributing the reports means that few developing countries have had access to the reports. This exacerbates the information divide that already exists. Publication of the CbC reports would give access to the information to tax administrations, researchers and the public.

However many businesses disagree with the introduction of any requirement to make the CbC reports public. The Business and Advisory Council (BIAC) noted that many of its members are strongly opposed to making information in the reports public. One of the reasons is that the reports contain commercially sensitive data.

Also BIAC notes in its comments that if per entity (rather than per jurisdiction) reporting is required for Table 1 of the CbC report this would increase the risk that commercially sensitive and strategic data would be disclosed at a detailed level.

Compliance costs for taxpayers are a concern for commentators. As one global advisory firm notes, multinationals have revised their systems in recent years to produce the information required in the CbC reports and if changes are made in the requirements this will mean more compliance costs to adapt to them. Any changes will need to be viewed from a cost benefit perspective.