Canada’s Department of Finance released draft legislative proposals to implement certain outstanding measures that were originally announced in the 2016 federal budget, including country-by-country reporting requirements.
The draft legislation sets out country-by-country (CbC) reporting requirements, as developed by the Organisation for Economic Cooperation and Development (OECD) and that would apply to a multinational enterprise (MNE) group that has total consolidated group revenue of €750 million or more in a fiscal year. The draft legislation provides:
A Canadian-resident "constituent entity" of an MNE group also would have to file the CbC report in certain circumstances. A constituent entity is a business entity within an MNE group that is included in the group's consolidated financial statements for financial reporting purposes (or would be required to be included if equity interests in any of the group's business entities were traded on a public securities exchange). It also includes any business entity that is excluded from the MNE group's consolidated financial statements solely for size or materiality reasons.
A Canadian-resident constituent entity must file the report when:
When there is more than one constituent entity (that is not the ultimate parent entity) of an MNE group in Canada, the draft legislation allows one constituent entities to be designated to file on behalf of other constituent entities in an MNE group.The draft legislation also allows a “surrogate parent” entity to file a CbC report, instead of the ultimate parent entity, when the surrogate parent's jurisdiction:
The draft legislation also extends the failure to file penalty to persons and partnerships who fail to file the CbC return.
Read an August 2016 report prepared by the KPMG member firm in Canada: 2016 Federal Budget - Draft Legislation Released
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