The Treasury Department and IRS released the final regulations that require annual country-by-country reporting (CbCR) for US multinationals with annual revenue during the preceding annual accounting period of USD 850 million or more.

The Treasury Department and IRS released for publication in the Federal Register final regulations (T.D. 9773) to implement CbC reporting as per final BEPS report. The final regulations apply to reporting periods of ultimate parent entities that begin on or after the first day of a taxable year of the ultimate parent entity that begins on or after publication of the final regulations in the Federal Register.

The Country-by-Country (CbC) report must be submitted by a company resident in U.S. that is the ultimate parent entity of a corporate group. A parent company is a company that is not a subsidiary of any other company in U.S. Country by country reporting requirement applies where the consolidated group revenue in the preceding year is $850 million or more.

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.

Number of employees for each tax jurisdiction of residence of the U.S. MNE group must be reported. Net book value of tangible assets, which does not include cash or cash equivalents, intangibles, or financial assets.

The CbC report must be filed with the ultimate parent entity’s income tax return for the taxable year, in or with which the reporting period ends, on or before the due date (including extensions) for filing that person’s income tax return or as otherwise prescribed by Form 8975.

The penalty rules under section 6038 generally apply, including reasonable cause relief for failure to file. If the CbC report is not filed in time a penalty of $10,000 will be applicable for each annual accounting period with respect to which such failure exists.

The Final Regulations apply to reporting periods of ultimate parent entities of US multinational enterprise (MNE) groups that begin on or after the first day of the tax year of the ultimate parent entity that begins on or after 30 June 2016.