Enhanced transparency for multinational enterprises: 44 tax administrations agree on CbCR and CRS information sharing system


During the 10th meeting of the OECD Forum on Tax Administration (FTA), held on 11, 12 and 13 May 2016, the heads of 44 tax administrations came to an agreement on the creation of a system that will enable the effective and efficient sharing of data gathered from the automatic exchange of information under the common reporting standard (CRS) and from country-by-country reports (CbCR).

As was noted by FTA chairman Edward Troup, one of the biggest challenges for tax administrations nowadays is the huge amount of data they gather from all available sources. In order to cope with this information overload, the Common Transmission System (CTS) has been established, which can be seen as the “pipes” that will organise the flow of information exchange between tax administrations. By means of this multilateral agreement, the burdensomeness of a bilateral approach has been avoided.

The OECD will commence negotiations with the chosen system supplier and expects to reach an agreement by June. The CTS could also be used in the light of other aspects of BEPS related information exchange, such as the exchange of tax rulings under Action 5.

Again, the creation of the CTS proves to be an important milestone towards implementation of the various guidelines of the OECD/G20 BEPS project and represents significantly increased co-operation on cross-border tax matters.

The 44 countries (and their respective tax administrations) that have agreed on the creation of a system that will enable sharing of data are:

Australia, Austria, Belgium, Brazil, Cambodia, Canada, Chile, China, Costa Rica, Denmark, Finland, France, Georgia, Germany, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Kazakhstan, Lithuania, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Pakistan, Portugal, Russia, Singapore, Slovakia, South Africa, South Korea, Spain, Sweden, Switzerland, Tanzania, Turkey, the United Kingdom and the United States.

This means that there is a significant overlap with the initial 31 countries who signed the Multilateral Competent Authority Agreement on the (automatic) Exchange of Country-by-Country Reports (MCAA) in January 2016 (find our newsflash on that subject here).

Also, with the signing of the MCAA by Canada, China, Iceland, India, and New Zealand on 12 May 2016, the total number of signatories is brought to 39 (Australia, Austria, Belgium, Chile, Costa Rica, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, Mexico, the Netherlands, Nigeria, Norway, Poland, Portugal, the Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland and the United Kingdom signed on 28 January 2016).

Read the full press release here.

It is imperative that organisations can comply with the detailed data requests and act now to risk assess the data to be disclosed. For more insights on CbCR and to understand the implications for your organisation please contact: jonas.van.de.gucht@be.pwc.com.