Country-by-country reporting, also known as CbC, is a financial report that multinational corporations must submit in many countries as part of a global initiative to combat tax evasion and tax avoidance.

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In the United States, CbC was introduced as part of the 2017 Tax Reform Act, and applies to multinational corporations with a consolidated annual gross income of at least $850 million. Under the law, these companies must file a CbC report that includes information about their revenues, profits, taxes paid, and assets in each country where they operate.

The CbC report is filed with the Internal Revenue Service (IRS), the US tax authority, and must be submitted within 12 months of the end of the company’s fiscal year.

The report must include detailed information about the company’s operations in each country where it operates, including the number of employees, revenues generated, pre-tax profits, taxes paid, and assets. It must also identify the company’s subsidiaries and branches in each country, and provide details about its ownership and control structure.

Multinational corporations must also provide information about any “aggressive tax planning” structures they have used to minimize their tax liability. This includes any transactions between subsidiaries or branches that may have the aim of reducing taxes.

The CbC report is used to help tax authorities combat tax evasion and tax avoidance. By providing detailed information about the company’s operations in each country, it is expected to make it easier for tax authorities to identify any inappropriate or suspicious activity.

In conclusion, the submission of the country-by-country report is an important requirement for multinational corporations in the United States seeking to comply with national and international tax laws. Filing this report helps improve tax transparency and prevent tax evasion, contributing to tax equity and a fairer tax system.

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