As the end of 2020 draws near and multinational entities are ticking-off items on their tax compliance agenda, one area that should feature prominently is ensuring compliance with Country-by-Country Reporting (“CbCR”) obligations. These annual obligations, which are applicable to multinational entities with a total consolidated group revenue of EUR 750M or more (“qualifying multinational groups”), impose reporting and/or notification obligations on the ultimate parent entity (“UPE”) and constituent entities of such groups.
With the exchange of CbC reports underway between jurisdictions, we have seen an increased level of activity from Revenue Jersey around CbCR, including issuing penalty notices to taxpayers who have failed to meet their notification obligations in prior years. In addition, the 2019 Jersey corporate tax return now contains a couple of questions focussed on identifying CbCR risks.
We expect compliance activities to increase as more jurisdictions exchange their CbC reports with Revenue Jersey/the Guernsey Revenue Service. It is therefore imperative that all impacted taxpayers comply with their obligations under the respective CbCR regulations.
Reminder of upcoming deadlines under CbCR Regulations: #timeisticking
- A Jersey resident UPE (or appointed surrogate parent entity (“SPE”)) of a qualifying multinational group must file the group’s CbC report within a year of the accounting period end date. Therefore, in respect of an accounting period ended 31 December 2019 the report must be submitted before 31 December 2020. Reporting should be done via Revenue Jersey’s Automatic Exchange of Information (“AEoI”) portal. To the extent that a ‘Jersey CbC report’ (as defined) is required in respect of an accounting period ended 31 December 2019, such a report is also due before 31 December 2020.
- In addition to the above reporting obligation, the UPE (if any) and all constituent entities of the multinational group that are resident in Jersey, must file a notification with Revenue Jersey via the AEoI portal, advising on amongst other things, intention to file a CbC report, jurisdiction of filing and, if they are not the reporting entity, disclosing the correct reporting entity. This notification is due before the accounting period end. As such, the deadline for making this notification for an accounting period ending 31 December 2020 is 31 December 2020.
- A Guernsey resident UPE (or SPE) of a qualifying multinational group must file the group’s CbC report within a year of the accounting period end date. In respect of an accounting period ended 31 December 2019 the report must be submitted before 31 December 2020. Reporting must be done via the Information Gateway Online Reporter (“IGOR”).
- Guernsey resident constituent entities are not required to file separate notifications on the group’s reporting entity and the jurisdiction of filing. This information is however required to be included in the entities’ annual company tax returns.
- As you may be aware, the Guernsey Revenue Service has extended the tax return filing deadline for the 2019 income tax return to 28 February 2021 due to the challenges posed by the pandemic. As the notification deadline is aligned to the tax return filing deadline, all Guernsey resident constituent entities (unless acting as UPE or SPE) required to file tax returns in Guernsey will therefore need to make their notifications for the calendar year 2019 by 28 February 2021 via their tax return.
- For clarification purposes, the due date to notify the Guernsey Revenue Service of a constituent entity’s identity either as a UPE or SPE remains 6 months following the last day of the group’s reporting fiscal year. This is a one-off notification obligation.
- Guernsey resident constituent entities not required to file tax returns for the 2019 year of charge will still be expected to notify the Guernsey Revenue Service of the identity and tax residence of the group’s reporting entity by 30 November 2020.
- Following cessation of the facility to submit returns in ‘bulk’ via the Corporate Service Providers gateway in Guernsey, particular attention has to be given to any Guernsey resident in-scope entities to ensure timely compliance with their reporting/notification obligations. The first step towards this is ensuring a proper assessment of such entities to determine whether they are in scope of the CbCR obligations.
Since the enactment of the Jersey and Guernsey Regulations, KPMG in the Channel Islands has been assisting clients comply with their obligations under these rules and supporting them by:
- assisting in converting data into the XML schema so as to facilitate CbC report filing;
- registering entities onto Revenue Jersey’s AEoI portal or Guernsey’s IGOR gateway;
- filing of groups’ CbC reports and making annual CbCR notifications;
- providing general advice on CbCR regulations in both Jersey and Guernsey (e.g. assessment as to whether entities are in scope of the CbCR regulations, liaising with Revenue Jersey and Guernsey’s Revenue Service on client CbCR matters).
If you would like to discuss further, please contact your usual contact within KPMG in the Channel Islands or Paul Eastwood.