On 6 February 2020 the OECD issued a consultation document inviting comments from interested parties on the review of the minimum standard on country by country (CbC) reporting under Action 13 of the project on base erosion and profit shifting (BEPS). Comments are invited by 6 March 2020.
The report on BEPS Action 13 provided for a review of the CbC reporting minimum standard to be completed by the end of 2020. This review should look at whether modifications to the content of CbC reports should be made; the appropriateness of the applicable revenue threshold; the effectiveness of the filing and dissemination mechanisms; and the BEPS Action 13 implementation package.
Through the consultation document the members of the OECD Inclusive Framework are looking for input from stakeholders as part of the 2020 review. The document comprises looks at general topics around the implementation and operation of BEPS Action 13; issues concerning the scope of CbC reporting; and matters related to the content of the CbC report.
General issues on BEPS Action 13
General topics examined by the document include the MNE group experience of CbC reporting implementation by jurisdictions; and aspects of the master file and local file that are also required by BEPS Action 13.
The document also looks at issues concerning the use of CbC reports by tax administrations in high level transfer pricing risk assessment, other BEPS-related risk assessment and economic and statistical analysis.
Scope of CbC reporting
Issues concerning the scope of CbC reporting include the definition of a multinational group and the level and operation of the consolidated group revenue threshold.
The document discusses the advantages of clarifying the definition of a group to include a single entity that conducts business through one or more permanent establishments in other jurisdictions. It also looks at the issue of whether separate CbC reports should be prepared by groups under common control that in aggregate have consolidated group revenue above the CbC reporting threshold.
The consultation document discusses lowering the consolidated group revenue threshold for CbC reporting. This would bring more groups within the scope of CbC reporting and would give tax administrations the chance to use CbC reports in the risk assessment of more groups. It would however place a compliance burden on smaller groups and on the tax administrations.
Content of the CbC report
The document discusses issues concerning the information to be presented in Table 1 of the CbC report, including whether aggregate or consolidated information should be provided; whether the information should be presented by entity rather than by tax jurisdiction; and whether additional information is needed. The document discusses the possible inclusion of additional columns in Table 1 to require reporting of related party interest, royalty and service fee income and expenses; total related party expenses; research and development expenditure; or deferred taxes.
Public meeting
A public consultation meeting on the 2020 review of BEPS Action 13 is to take place on 17 March 2020.
