Under BEPS Action 13, all large multinational enterprises (MNEs) are required to prepare a country-by-country (CbC) report with aggregate data on the global allocation of income, profit, taxes paid and economic activity among tax jurisdictions in which it operates. This CbC report is shared with tax administrations in these jurisdictions, for use in high level transfer pricing and BEPS risk assessments.

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The issue

The lack of quality data on corporate taxation has been a major limitation to measuring the fiscal and economic effects of tax avoidance, making it difficult for authorities to carry out transfer pricing assessements on transactions between linked companies and even more difficult to carry out audits.

How to solve it

The BEPS Action 13 report (Transfer Pricing Documentation and Country-by-Country Reporting) provides a template for multinational enterprises (MNEs) to report annually and for each tax jurisdiction in which they do business the information set out therein. This report is called the Country-by-Country (CbC) Report.

To facilitate the implementation of the CbC Reporting standard, the BEPS Action 13 report includes a CbC Reporting Implementation Package which consists of:

• Model legislation which could be used by countries to require the ultimate parent entity of an MNE group to file the CbC Report in its jurisdiction of residence including backup filing requirements.
• Three model Competent Authority Agreements that could be used to facilitate implementation of the exchange of CbC Reports, respectively based on the:
  • Multilateral Convention on Administrative Assistance in Tax Matters.
  • Bilateral tax conventions.
  • Tax Information Exchange Agreements (TIEAs).

The BEPS Action 13 report also included a requirement that the CbC reporting ‎minimum standard be reviewed from 2020 (the 2020 review). In February 2020, the OECD launched a public consultation process on matters where its members seek input from stakeholders in conducting this 2020 review.

The results

58 jurisdictions required or permitted the filing of CbC reports for 2016 and more than 100 jurisdictions have law in place introducing a CbC reporting obligation.

In addition, as of October 2022, over 3300 relationships are in place for the exchange of CbC reports between jurisdictions. This means that substantially every MNE with consolidated group revenue of at least EUR 750 million is already required to file a CbC report, and the gaps that do remain are closing.

The first exchanges of CbC reports took place in June 2018 and, with the OECD’s support, tax administrations are incorporating CbC reports into their tax risk assessment and assurance processes to understand better the risks posed to their jurisdictions. CbC reports are also at the heart of other programmes to provide greater tax certainty to MNEs, including the OECD International Compliance Assurance Programme (ICAP).

The second set of aggregated and anonymised data from CbCRs was released in July 2021, and provides information on the global tax and economic activities of nearly 6000 multinational enterprise groups headquartered in 38 jurisdictions and operating across more than 100 jurisdictions worldwide.