Further guidance has been released on the implementation of CbC reporting.
The OECD have released an updated edition of their guidance on the implementation of country by country (CbC) reporting (BEPS Action 13). The updated guidance contains new sections covering a number of specific issues on the implementation of CbC reporting for both multinational businesses and tax authorities.
The new guidance covers the following topics:
The guidance sets out how the CbC filing obligation is affected for changes in ownership following mergers, acquisitions and demergers, and what information should be included in the CbC report. This section also includes some examples to show how the guidance should be applied.
Short accounting periods
The guidance sets out transitional arrangements for short accounting periods that start on or after 1 January 2016 and that end before 31 December 2016. It also gives a number of approaches that can be used to adjust the €750 million threshold for a short accounting period to determine whether a group is an Excluded MNE Group.
Negative figures for accumulated earnings
Negative figures for accumulated earnings should be reported in Table 1 without modification, being netted off with any positive figures from the same jurisdiction if there are any. The OECD have also provided suggested wording to be included in Table 3 on this point.
Fair value accounting
The guidance confirms that revenues and profits determined in accordance with fair value accounting and reported in financial statements may be reported in the CbC report without further adjustment.
Deemed listing provision
The guidance now confirms that the deemed listing provision is only relevant where an enterprise would otherwise be the Ultimate Parent Entity but it is not required to prepare Consolidated Financial Statements in the jurisdiction where it is a resident for tax purposes.
Definition of total consolidated group revenue
The total consolidated group revenue should include all revenue that is (or would be) reflected in the consolidated financial statements. If the jurisdiction where the UPE resides allows inclusion of extraordinary income and gains from investment activity in consolidated group revenue, they should be included for CbC purposes.
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