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OECD: Corporate tax statistics from country-by-country reporting

OECD: Corporate tax statistics from CbC reporting

The Organisation for Economic Cooperation and Development (OECD) today announced the release of a report of aggregated information on the global tax and economic activities of approximately 4,000 multinational enterprise (MNE) groups headquartered in 26 jurisdictions and operating across more than 100 jurisdictions.

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The report—Corporate Tax Statistics—is based on the country-by-country (CbC) reporting by MNEs for 2016. With CbC reporting, large MNEs are required to disclose important information about their profits, tangible assets, employees, and locations where they pay their taxes and every country in which they operate. CbC reports thus provide tax authorities with information about MNEs to allow for risk assessment purposes.

As noted in a related OECD release, the aggregated CbC reporting statistics for 2016 have been provided to the OECD by member jurisdictions of the Inclusive Framework on BEPS. This new dataset includes aggregated data on the global tax and economic activities of MNEs, including profit before income tax, income tax paid (on a cash basis), current year income tax accrued, unrelated and related-party revenues, number of employees, tangible assets, and the main business activity (or activities) of MNEs. Read a set of ”frequently asked questions” (FAQs) [PDF 927 KB] about CbC reporting as provided by the OECD.

Preliminary insights from these new statistics suggest the following:

  • There is a misalignment between the location where profits are reported and the location where economic activities occur, with MNEs in investment hubs reporting a relatively high share of profits compared to their share of employees and tangible assets.
  • Revenues per employee tend to be higher where statutory corporate income tax rates are zero and in investment hubs.
  • On average, the share of related-party revenues in total revenues is higher for MNEs in investment hubs.
  • The composition of business activity differs across jurisdiction groups, with the predominant business activity in investment hubs being “holding shares and other equity instruments.”

The OECD release continues that given the limitations of the data and that the observations above could also reflect some commercial considerations, “they are indicative of the existence of BEPS behaviour and reinforce the need to continue to address remaining BEPS issues as part of the Inclusive Framework’s work on Pillar 2 of the ongoing international efforts to address the tax challenges arising from digitalisation.”

The new OECD analysis also shows that corporate income tax remains a significant source of tax revenues for governments across the globe, accounting for 14.6% of total tax revenues on average across the 93 jurisdictions in 2017 (compared to 12.1% in 2000). 

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