The Organisation for Economic Cooperation and Development has made a standardised electronic format for the exchange of Country-by-Country (CbC) Reports between jurisdictions to ensure swift and efficient implementation of the BEPS measures.
- Base Erosion and Profit Shifting (BEPS)refers to tax planning strategies that exploit these gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid.
- The G20 BEPS Project had set out 15 key actions to reform the international tax framework and ensure that profits are reported where economic activities are carried out and value created.
- The OECD has released standardised electronic format with an objective of mandating CbC is to ensure that all relevant tax authorities have access to the same information about an MNE group’s value chain and the resulting tax consequences.
- The schema will assist tax authorities in understanding complete structure of organisation including business activities, do value chain analysis and identify gaps and transfer pricing risks.
- The information to be included in the CbC Report will be collected by the country of residence of the Reporting Entity for the MNE group, and will then be exchanged under the relevant international exchange of information agreement.
- CbC Reports, to be electronically transmitted between Competent Authorities, will assist tax administrations in obtaining a complete understanding of the way in which Multinational Enterprises (MNEs) structure their operations.
Organisation for Economic Co-operation and Development:
- Headquarters: France
- Membership: 34 countries