Azerbaijan: Transfer pricing rules: Law No. 454-VQD of 16 December 2016 establishes new transfer pricing (TP) rules for certain transactions. The new TP rules cover transactions whose total value exceeds AZN 500,000 (approximately USD 278,000) in a calendar year. The taxpayer must notify the tax authorities about such transactions before 31 March of each year.
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Peru: Intra-group services: The Legislative Decree N° 1312 introduces an entirely new requirement to deduct intra-group service charges. Specifically, it requires satisfying the “benefit test” to demonstrate that the services were in fact received.
BEPS related compliance
Master file information: Taxpayers that are members of a group whose annual revenue for the fiscal year exceeds 20,000 Tax Units (approximately US$23.82 million) will be required to submit a master file with high-level information of the group’s business operations and TP policies. The Master File should provide information of the group regarding organizational structure and activities performed.
Local file information: The local file documentation requirement applies only to taxpayers whose annual revenue for the fiscal year exceeds 2,300 Tax Units (approximately US$2.74 million). The first local file with information regarding related-party transactions and transactions with tax haven jurisdictions is required for fiscal year 2017.
General rule for CbC reporting requirement: Peru published Legislative Decree N° 1312 (Legislative Decree) amending the Peruvian transfer pricing (TP) reporting requirements as per Action 13 of the OECD’s base erosion and profit shifting (BEPS) project. Tax resident entities that are part of a Multinational Enterprise (MNE) Group with consolidated group revenue of €750 million and above will need to comply with the CbCR requirements. The CbC report is first due in 2018. The average number of employees in each entity must be reported. The CbC report must be submitted within twelve months after the end of the tax year.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Peru that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Peru.
Group definition: Global group means a group of entities, at least one of which is a foreign entity that are consolidated for accounting purposes as a single group.
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
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Denmark: Documentation requirement: The Minister of Taxation issued order BEK no. 401 and 402 regarding transfer pricing documentation. The new documentation guidelines BEK no. 402 will replace the previous guidelines of BEK no. 42. The new guidelines include more specific documentation requirements than under the previous documentation guidelines. The new documentation guidelines is applicable from 1 January 2017.
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Malta: Mutual agreement procedure (MAP): The Inland Revenue Department issued guidelines on 15 December 2016 under the provisions of article 96(2) of the Income Tax Act, on the use of the Mutual Agreement Procedure. The procedure allows the Malta Competent Authority or designated representatives of the competent authority to interact with their counterparts in contracting states to a tax treaty or parties to the Arbitration Convention (90/436), in order to resolve international tax disputes.
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Iceland: BEPS related compliance
General rule for CbC reporting requirement: The Ministry of Finance and Economic Affairs of Iceland issued Regulation No. 1166/2016 on the filing of country-by-country reports (CbCR) for the MNEs group in Iceland with consolidated turnover of the group exceeding ISK 100 billion in the preceding financial year.The average number of employees in each entity must be reported. The CbC report must be submitted within twelve months after the end of the tax year.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Iceland that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Iceland.
Group definition: Global group means a group of entities, at least one of which is a foreign entity that are consolidated for accounting purposes as a single group.
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
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Spain: Model country-by-country reporting (CbCR) form: The tax authorities of Spain recently published a communication announcing the submission of a model country-by-country reporting (CbCR) form 231. The form was approved on 30 December 2016.
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Canada: BEPS related compliance
General rule for CbC reporting requirement: The House of Commons of Canada passed Bill C-29, which provides the final legislation to implement country-by-country (CbC) reporting in Canada. The final legislation formalizes the introduction of section 233.8 to Canada’s Income Tax Act (the Act), which sets out the requirements for CbC reporting. The final 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 f €750 million or more in a fiscal year. The average number of employees in each entity must be reported. As per the final legislative, 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”.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Canada that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Canada.
Group definition: The  term  “MNE  Group”  means any  Group  that  (i)  includes  two  or  more enterprises the  tax  residence  for  which  is in  different  jurisdictions, or includes  an enterprise  that  is  resident  for  tax  purposes  in  one  jurisdiction  and  is  subject  to  tax  with respect  to the business  carried  out  through  a  permanent  establishment  in  another jurisdiction, and (ii) is not an Excluded MNE Group.
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
Penalty for non-compliance: Penalties are set out in the final 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.
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South Africa: BEPS related compliance
General rule for CbC reporting requirement: The South African Revenue Services (SARS) and Ministry of Finance issued final regulation via Government Gazette No.R. 1598 of 23 December 2016 to implement the country-by-country (CbC) reporting requirements for the South African MNEs with annual group consolidated turnover exceeding ZAR 10 billion or EUR 750 million. The average number of employees in each entity must be reported. The CbC report must be filed with the SARS no later than 12 months after the last day of the reporting fiscal year of the MNE Group.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in South African that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in South African.
Group definition: The term “Group” means a collection of enterprises related through ownership or control such that it is either required to prepare Consolidated Financial Statements for financial reporting purposes under applicable accounting principles or would be so required if equity interests in any of the enterprises were traded on a public securities exchange.
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
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Luxembourg: Transfer pricing rule: A new article 56bis has been included in the Income Tax Act (ITA) to codify the arm’s length principle. As per the article 56bis, companies principally performing intra-group financing transactions have to determine an arm’s length price for all transactions. It is specified that if a transaction is generally not concluded by unrelated parties, as such, it does not automatically mean that the transaction is not at arm’s length.
Intra-group services: The Luxembourg Tax Authorities issued an administrative Circulaire (the Circular) reshaping the transfer pricing framework for companies carrying out intra-group financing activities in Luxembourg. The Circular defines intra-group financing transactions as all activities consisting in granting interest bearing loans or advances to related entities and funding them with, for instance, public debt issuance, private loans, advances, or bank loans. It focuses on the importance of the comparability analysis and provides substantial details on how to conduct it consistent with OECD principles. The Circular states that economic reality should prevail over the contractual terms of the agreement. Under the Circular, a group financing company should have a physical presence in Luxembourg in order to perform risk control functions. The new Circular will replace Circulaires n°164/2 of 28 January 2011 and n°164/2bis of 8 April 2011 and is effective from 1 January 2017.
Mandatory automatic exchange of information: The CbCR Law implementing Directive 2016/881/EU of 25 May 2016 with respect to the mandatory automatic exchange of information in the field of taxation, was published in Luxembourg’s Official Gazette. Based on the Luxembourg CbCR Law, a Luxembourg group entity of a Multinational Enterprise (MNE) group qualifying for the CBCR requirements needs to notify the Luxembourg tax authorities about the identity and tax residence of the entity filing the CBC report by the last day of their reporting fiscal year.
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Korea: BEBS related compliance
General rule for CbC reporting requirement: Under Article 21-2 of the proposed enforcement decree released on 28 December 2016, multinational entities (MNEs) operating in Korea would be required to submit a “reporting entity notification form” in advance, and on that form, the MNEs would need to specify what entity, and in what jurisdiction, the CbC report would be submitted. Under Article 21-2 of the proposed enforcement decree released on 28 December 2016, the reporting entity notification form would be required to be submitted within six months of the fiscal year-end.
Penalty for non-compliance: Under the proposed enforcement decree released on 28 December 2016, penalty provision would be revised so that each report would be subject to a separate penalty of KRW 10 million. As proposed, if a taxpayer is missing a detailed statement of cross-border transactions for one entity, the taxpayer would be subject to a separate penalty of KRW 5 million. In other words, a taxpayer would be separately subject to a penalty in the amount of KRW 5 million per each missing entity. The penalty for both the “combined report of international transactions” and a detailed statement of the cross-border transactions could not be more than KRW 100 million in total.
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Chile: BEPS related compliance
General rule for CbC reporting requirement: The Chilean tax authorities published Resolution No. 126 to introduce an associated country-by-country (CbC) reporting requirement for multinational companies that, in the year prior to the reporting period, have a consolidated revenue of at least €750 million. Resident entities belonging to the multinational companies group (MCG) which have been designated by the parent entity of the MCG as the sole representative for the purpose of filing the “Country By Country Report” affidavit in the name of the parent or controlling entity are also required submit CbC report. The CbC report is submitted using a new Form 1937. In some cases, taxpayers must also file a transfer pricing return (Form 1907) with the CbC report. The average number of employees in each entity must be reported. The deadline for submitting CbC report is the last business day of June each year, for operations carried out during the preceding commercial year.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Chile that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Chile.
Group definition: Global group means a group of entities, at least one of which is a foreign entity that are consolidated for accounting purposes as a single group.
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
Penalty for non-compliance: The new resolution applies penalties for non-compliance for both Transfer Pricing Return, ranging from 10 to 50 annual tax units (approximately USD 10,000 to USD 50,000) without exceeding the upper limit between 15% taxpayer’s equity or 5% of the effective capital, whichever is greater.
Specific TP Compliance: The CbC report is submitted using a new Form 1937. In some cases, taxpayers must also file a transfer pricing return (Form 1907) with the CbC report.  Annual Affidavit on Transfer Pricing (Form No.1907) must also be submitted.
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Brazil: BEPS related compliance
General rule for CbC reporting requirement: Tax authorities of Brazil issued Normative Instruction 1.681 of 29 December 2016 that establishes the rules for mandatory annual filing of country-by-country (CbC) reports for Multinational groups where the ultimate parent company is a resident in Brazil. The CbC report filing is required for entities that, as the ultimate parent company of a multinational group, are residents of Brazil for tax purposes, and that have total consolidated group revenue of the fiscal year prior to the year of the CbC reporting of an amount greater than R$ 2.26 billion if the controller is domiciled in Brazil or €750 (or the equivalent in local currency) if the controller is domiciled abroad. The CbC report is to be filed along with the taxpayer’s corporate income tax return (ECF) for the related year. The average number of employees in each entity must be reported. The CbC report and notifications will be embedded in the Brazilian electronic corporate tax return (ECF), which uses the calendar year. The ECF must be filed by the end of July of the subsequent year.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Brazil that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Brazil.
Group definition: Global group means a group of entities, at least one of which is a foreign entity that are consolidated for accounting purposes as a single group.
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
Penalty for non-compliance: The Normative Instruction 1.681 imposes potentially heavy penalties for noncompliance with the CbCR rules. Transactions and financial operations that are not fully reported in the CbC report give rise to a penalty of up to 3% of the underlying value of the transactions.
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Malaysia: Main Corporate income tax rate: The enacted Finance Act 2017 reduced the corporate tax for the year of assessment 2017 and 2018. As per the Finance Act 2017, the reduce tax rate will be between 1 and 4 percentage points for companies with significant increase in taxable income for year of assessment 2017 and 2018. Reduce tax rate from 19% to 18% will be applicable for SMEs with taxable income up to first RM500,000.
BEPS related compliance:
General rule for CbC reporting requirement: Malaysia has incorporated CbC reporting requirement for Malaysian-parented multinational corporate groups with total consolidated group revenue of at least Malaysian Ringgit (RM) 3 billion in the financial year preceding the reporting financial year. The CbC rules are align closely with recommendations under the base erosion and profit shifting (BEPS) project’s report on Action 13. The average number of employees in each entity must be reported. The CbC report must be submitted within twelve months after the end of the tax year.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Malaysia that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Malaysia.
Group definition: Global group means a group of entities, at least one of which is a foreign entity that are consolidated for accounting purposes as a single group.
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
Penalty for non-compliance: An administrative penalty of between MYR 20,000–100,000 or imprisonment of not more than 6 months, or both, may be imposed for an incorrect return or failure to comply with CbC reporting within the stipulated timeline.
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Japan: Documentation requirement: Japan’s National Tax Agency (NTA) has issued Frequently Asked Questions (FAQs) and answers regarding transfer pricing (TP) documentation requirements in Japan.
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Cyprus: BEPS related compliance
General rule for CbC reporting requirement: All Cypriot tax resident entities that are part of a Multinational Enterprise (MNE) Group with consolidated group revenue of €750 million and above will need to comply with the CbCR requirements for financial years starting on or after 1 January 2016. The law is in accordance with a European Union (EU) Directive of 25 May 2016 requiring all EU Member States to implement a CbC reporting obligation in their national legislation. Alternatively, any other entity of the group that is resident in Cyprus and it is not the ultimate parent entity may be appointed as the surrogate parent entity. In this case, such entity will have to prepare and submit the CbC report if the ultimate parent entity is not resident in Cyprus and it is not obligated to file a CbC report in its country of residence, or although obligated to file the CbC report, there is no exchange of information instrument in place with Cyprus, or the jurisdiction has been notified regarding a systematic failure of exchanging information. One of the requirements that is provided under the Decree is that any Cypriot constituent entity of an MNE Group (either tax resident company or a Cypriot permanent establishment) shall notify the Cyprus tax authorities with the identification of the reporting entity, no later than the last day of the reporting fiscal Year of such MNE Group and first deadline for notification is 20 October 2017. The average number of employees in each entity must be reported. The CbC report must be submitted within twelve months after the end of the tax year.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Cyprus that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Cyprus.
Group definition: Global group means a group of entities, at least one of which is a foreign entity that are consolidated for accounting purposes as a single group.
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
Penalty for non-compliance: An administrative penalty of €100 may be imposed for a failure to comply with the CbCR submission requirements if it is not amended subsequently.
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Nigeria: Specific TP compliance: Nigeria’s Federal Inland Revenue Service released a revised transfer pricing declaration form and a revised disclosure form for use by taxpayers beginning from January 2017. All taxable persons with related-party (connected) transactions must file their returns using these new forms.
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Australia: CbC reporting guidance: The Australian Taxation Office (ATO) released a guidance in the form of questions and answers (Q&As) in respect of compliance with country-by-country (CbC) reporting requirements. The guidance reflects the transitional administrative practice of the ATO until the planned review of CbC reporting in 2020.
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Mexico: Transfer pricing adjustment: Mexican tax authorities issued rule 3.9.1of the Miscellaneous Rule on 8 December 2016 regarding Transfer Pricing adjustments. The rule establishes that all transfer pricing adjustments should be reflected in the tax return in which the related party transaction occurred.
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Indonesia: BEPS related compliance
Master file information: Indonesia has introduced a requirement for a master file from 1 January 2017 in line with the OECD Base Erosion and Profit Shifting (BEPS) project. Under PMK-213, Indonesian taxpayers are required to prepare a Master File if the taxpayer Conducts related party transactions (in the covered fiscal year) and has gross revenues in the prior fiscal year of more than IDR50 billion (approximately US$3.7 million) or Conducted related party transactions in the prior fiscal year with a value of more than IDR20 billion (approximately US$1.4 million) of tangible goods transactions, or more than IDR5 billion (approximately US$372,000) for each service, interest payment, utilization of intangible properties or other affiliated transactions. Indonesian taxpayers are also required to prepare a Master File if it Conducts transactions with related parties that are located in countries or jurisdictions with income tax rates lower than the Indonesian corporate income tax rate of 25%.  Master File will contain information regarding description of the group’s capital structure, transfer pricing policy and significant intangible assets utilized.
Local file information: Indonesia has introduced a requirement for a master filefrom 1 January 2017 in line with the OECD Base Erosion and Profit Shifting (BEPS) project. Under PMK-213, Indonesian taxpayers are required to prepare a Local File if the taxpayer Conducts related party transactions (in the covered fiscal year) and has gross revenues in the prior fiscal year of more than IDR50 billion (approximately US$3.7 million) or Conducted related party transactions in the prior fiscal year with a value of more than IDR20 billion (approximately US$1.4 million) of tangible goods transactions, or more than IDR5 billion (approximately US$372,000) for each service, interest payment, utilization of intangible properties or other affiliated transactions. Indonesian taxpayers are also required to prepare a Local file if it Conducts transactions with related parties that are located in countries or jurisdictions with income tax rates lower than the Indonesian corporate income tax rate of 25%.  A Local File will contain specific TP information for each relevant country of operation.
General rule for CbC reporting requirement: Indonesia has introduced Country-by-Country (CbC) reporting requirement for an Indonesian taxpayer who is classified as the parent entity of a business group and who has consolidated gross revenues for that particular fiscal year of at least IDR11 trillion (approximately US$818 million). The Country-by-Country (CbC) reporting requirement also applicable for an Indonesian taxpayer whose parent entity is a foreign taxpayer and domiciled in a country/jurisdiction that does not require the parent entity to submit a CbC Report or that does not have an exchange of information agreement for taxation purposes with Indonesian Government or that has an agreement with Indonesian Government on the exchange of information for taxation purposes, however, the CbC Report information could not be obtained by the Indonesian Government from that country/jurisdiction. The CbC Report must be available no later than 12 months after fiscal year end.
Parent company: The Country-by-Country (CbC) report must be submitted by a company resident in Indonesia that is the parent company of a corporate group. A parent company is a company that is not a subsidiary of any other company in Indonesia.
Group definition: The country by country reporting requirement applies where the consolidated gross revenues for that particular fiscal year of at least IDR11 trillion (approximately US$818 million).
Profits and tax paid: The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
Penalty for non-compliance: If taxpayers have not prepared the Master File and Local File prior to the submission of their CITR, then their CITR may be considered as incomplete. Where a CITR is considered to be incomplete, there is the potential for penalties to be levied by the DGT on any unpaid tax of up to 200%, as well as further criminal sanctions.
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Singapore: Transfer pricing rules: The Inland Revenue Authority of Singapore (IRAS) issued the fourth edition of the e-Tax guide on 12 January 2017 regarding the transfer pricing guidelines and included the principle that profits should be taxed where the real economic activities generating the profits are performed and where value is created.
Documentation requirement: The Inland Revenue Authority of Singapore (IRAS) issued the fourth edition of the e-Tax guide with guidance on the TP documentation which is to be organized at Group level and Entity level. TP documentation at group level is to include information of the group’s existing unilateral advance pricing arrangements (APAs) and other tax rulings relating to the allocation of income among countries while the documentation at entity level is to include a copy of the existing unilateral and bilateral/multilateral APAs.
Mutual agreement procedure (MAP): The Inland Revenue Authority of Singapore (IRAS) issued the fourth edition of the e-Tax guide with enhanced guidance on mutual agreement procedure (MAP).
Advance pricing agreement (APA) rules: The Inland Revenue Authority of Singapore (IRAS) issued the fourth edition of the e-Tax guide with enhanced guidance on Advance Pricing Agreement (APA).
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Slovenia: Availability of APA: As per the rules published in the Official Gazette No. 85/2016 of 28 December 2016, Advance Pricing Agreement (APA) will be introduced from 1 July 2017 onwards. The APA application must be addressed to the financial administration and must contain mandatory elements and an indication of the type of APA (i.e. unilateral, bilateral or multilateral). Critical assumptions must be explained in APA and be in accordance with the arm’s length principle.The APA authority is the institute of Advance Pricing Agreement (APA).
APAs: As per the rules published in the Official Gazette No. 85/2016 of 28 December 2016, unilateral, bilateral & multilateral agreement will be available from 1 July 2017.
APA rules: As per the rules published in the Official Gazette No. 85/2016 of 28 December 2016, in order to conclude an Advance Pricing Agreement, the taxpayer will have to file a written application with the tax authority.
APA validity: As per the rules published in the Official Gazette No. 85/2016 of 28 December 2016,APA may be signed for 5 years with the possibility of an extension and a request for an extension must be filed at least 6 months before the validity of the APA has elapsed.
Fees for APA: As per the rules published in the Official Gazette No. 85/2016 of 28 December 2016,the cost of an APA procedure is EUR 15,000.
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Netherlands: Information exchange: The Bill submitted by the State Secretary for Finance proposes the addition of a new article (article 6e) which would provide a legal basis for the automatic exchange of CbC reports with Member States. The CbC report will be exchanged within 15 months of the last day of the period to which the report pertains (18 months for the first reporting period commencing on or after 1 January 2016).
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