close
Share with your friends

OECD: More guidance on country-by-country reporting, MNE groups

OECD: More guidance on country-by-country reporting

The Organisation for Economic Cooperation and Development (OECD) released additional interpretative guidance for implementation and operation of country-by-country (CbC) reporting pursuant to base erosion and profit shifting (BEPS) Action 13.

1000

Related content

As noted in the OECD release, the new guidance includes questions and answers about several topics including:

  • The treatment of dividends received
  • The operation of local filing
  • The use of rounded amounts in Table 1 of a multinational enterprise (MNE) group’s CbC report
  • The information that must be provided with respect to the sources of data used

This guidance also reflects the complete set of guidance concerning the interpretation and operation of BEPS Action 13 issued to date.

In addition, the OECD provided a summary of common errors made by MNE groups in preparing CbC reports. The aim is to help MNE groups avoid these errors and assist tax administrations in detecting them when they occur.


Treatment of dividends in Table 1

The OECD clarified that payments received from other constituent entities that are treated as dividends in the payer's tax jurisdiction are excluded from "Profit (Loss) before Income Tax" in Table 1, "Overview of allocation of income, taxes and business activities by tax jurisdiction" consistent with the exclusion of these amounts in "Revenue.” This guidance applies to all reporting fiscal years of multinational groups that commence on or after 1 January 2020, with earlier adoption encouraged. The OECD noted that this guidance replaces previous guidance that it issued in September 2018.


Shortened or rounded amounts in Table 1

The OECD confirmed that its reporting guidance specifies that multinationals should use the full financial amounts when completing Table 1, as shortened amounts are not acceptable. However, the OECD noted that some jurisdictions may accept a reasonable level of rounding, even though is not required to accept any rounding. The OECD said it will monitor the use of rounded amounts and may revisit this guidance in the future.


Source of information in Table 3

The OECD advised that although a multinational group may provide a brief description of the sources of data used in Table 3, "Additional information" the description must be sufficient to enable an understanding of the source of each item of information. Further, the description must provide an explanation when information relevant to a particular jurisdiction is taken from multiple sources of data, or when those sources change over time.


Additional administrative guidance

In the revised guidance, the OECD identified common issues that multinational groups have made when preparing their CbC reports. In the guidance and an additional chart, the OECD outlines 14 reporting errors that tax administrations have encountered, alongside how the information was to have been reported as referenced in other OECD publications.


Additional OECD comments

  • A multinational group's reporting fiscal year may be less than 12 months for the purposes of a CbC report.
  • When applying the "deemed listing provision" if the parent entity of a multinational group is tax resident in a jurisdiction that does not have a securities exchange, the jurisdiction must specify one or more jurisdictions with a securities exchange that would be considered acceptable when determining whether an entity is the ultimate parent entity of a multinational group.
  • Jurisdictions cannot require constituent entities to file a CbC report under local filing rules if the ultimate parent entity of a multinational resides in a tax jurisdiction that does not require a CbC report to be filed, and this is in accordance with the BEPS Action 13 minimum standard (including taking into account interpretative guidance).
  • Jurisdictions are encouraged to be flexible when applying local filing (i.e., to accept local filing that contains information from the ultimate parent entity's filed CbC report).
  • Jurisdictions with local filing requirements need to consider applying a filing deadline for these reports no earlier than 12 months after the end of the reporting fiscal year.
  • All jurisdictions need to consider making a unilateral declaration to bring forward the effective date of the multilateral convention on mutual administrative assistance in tax matters when exchanging CbC when appropriate.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal