OECD: Status update on BEPS Action 13 (country-by-country reporting) and Action 14 (mutual agreement procedure)
Transparency of global operations of large MNEs, resolution of tax-related disputes between jurisdictions
Country-by-country reporting and mutual agreement procedure
The Organisation for Economic Cooperation and Development (OECD) today issued a release regarding the status of implementation of the base erosion and profit shifting (BEPS) Action 13 on the transparency of global operations of large multinational enterprises (MNEs) and BEPS Action 14 on the resolution of tax-related disputes between jurisdictions.
Read today’s OECD release
BEPS Action 13—country-by-country (CbC) reporting
The BEPS Action 13 minimum standard on CbC reporting requires tax administrations to collect and share detailed information on all large MNEs doing business in their country. Information collected is to include the amount of revenue reported, profit before income tax, and income tax paid and accrued, as well as the stated capital, accumulated earnings, number of employees, and tangible assets—all reported by jurisdiction.
The fourth annual peer review of BEPS Action 13 considers implementation of the CbC reporting minimum standard by jurisdictions as of April 2020 and covers 132 “Inclusive Framework” members.
- More than 100 jurisdictions have introduced legislation to impose a filing obligation on MNE groups, covering practically all MNE groups with consolidated group revenue equal to or greater than the threshold of €750 million. The remaining Inclusive Framework members are working towards finalising their domestic legal frameworks with the support of the OECD.
- When legislation is in place, implementation of CbC reporting is reportedly consistent with the Action 13 minimum standard.
- Many recommendations made in the first three peer review phases have now been addressed and these recommendations have been removed.
- More than 3,000 bilateral relationships for the exchange of CbC reports are now in place.
The BEPS Action 13 peer review is an annual process, and the next peer review report will be released in the third quarter of 2022.
BEPS Action 14—mutual agreement procedure (MAP)
The stage two peer review monitoring reports of BEPS Action 14 evaluate the progress made by Brazil, Bulgaria, China, Hong Kong, Indonesia, Russia, and Saudi Arabia in implementing recommendations resulting from the stage one peer review. Any developments during the period 1 January 2019 - 31 July 2020 were considered and build on the MAP statistics for 2016-2019.
- The Multilateral Instrument (MLI) was signed by Bulgaria, China, Hong Kong, Indonesia, Russia, and Saudi Arabia, and has been ratified by Indonesia, Russia, and Saudi Arabia—bringing a “substantial number” of these countries’ treaties in line with the Action 14 minimum standard. In addition, bilateral negotiations are either ongoing or concluded.
- Bulgaria, China, Hong Kong, Indonesia, and Saudi Arabia now have a documented bilateral notification/consultation process to apply in situations when an objection is considered as being not justified by their competent authority.
- Brazil, Bulgaria, China, Hong Kong, and Saudi Arabia have added more personnel to the competent authority function and/or have made organisational improvements with a view to handle MAP cases in a more timely, effective, and efficient manner.
- Hong Kong, Russia, and Saudi Arabia closed MAP cases within the pursued average time of 24 months. The median time taken by Bulgaria to resolve MAP cases was also within this pursued average.
- Russia introduced legislative changes so that MAP agreements can always be implemented notwithstanding domestic time limits, while this was already possible in China and Hong Kong.
- All the concerned jurisdictions have issued or updated their MAP guidance.
The OECD release states that BEPS Action 14 stage two peer review reports will continue to be published in batches.
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