On 8 June 2015, the OECD released a “Country-by-Country Reporting Implementation Package”. The package includes model legislation the OECD suggests could be used by countries to mandate filing of country-by-country reports (“CbCRs”). The model legislation does not attempt to address the filing of the so-called master file or local file reports. The key takeaway is that the CbC reporting obligation will fall on the ultimate parent entity (there are backup filing requirements in case that jurisdiction does not require filing).
The implementation package also includes three model competent authority agreements that could be used by each country, depending on whether it intends to effect an exchange of CbCRs through the “Multilateral Convention on Mutual Administrative Assistance in Tax Matters”, the exchange of information article of a bilateral tax convention, or a bilateral tax information exchange agreement.
Helpfully, the model legislation and model competent authority agreements also reveal the OECD members’ current thinking on, among other things, (i) how a multinational enterprise group is to be composed for purposes of the filing requirements, (ii) which small MNE groups would be excluded from the requirements, (iii) which entity in the MNE group would be expected to file the CbCR, and (iv) the intended government use and confidentiality of the CbCR information.
As the OECD has finalised implementation through the model legislation and the next step is now at the local country level, MNEs should evaluate, if they have not done so already, whether they can comply with the terms of the CbC reporting proposal in a timely manner.
More information on to the Country-by-Country Reporting Implementation Package can be found here.
