Country-by-Country (CbC) reporting is a tax transparency requirement introduced by the Organisation for Economic Co-operation and Development (OECD) under the Base Erosion and Profit Shifting (BEPS) Action Plan. The CbC reporting framework aims to increase transparency in international tax matters and prevent multinational companies from shifting profits to low-tax jurisdictions. In Barbados, CbC reporting is mandatory for multinational corporations with annual consolidated group revenue of at least USD 850 million. This article will discuss how CbC reporting is presented in Barbados, and everything that companies should know to meet the requirements.

An Overview of CbC Reporting in Barbados

Barbados has implemented CbC reporting requirements under the Income Tax Act, 1969, which was amended in 2018 to include the CbC reporting framework. According to the law, multinational corporations with Barbados-resident entities, whose annual consolidated group revenue exceeds USD 850 million, must file a CbC report.

The CbC report must be submitted electronically in XML format to the Barbados Revenue Authority (BRA) within 12 months after the end of the fiscal year. The report should provide comprehensive information on the multinational group’s activities, profits, and taxes paid in each jurisdiction where it operates.

The CbC report should also include details on the identity and tax residency of the constituent entities of the multinational group, their business activities, and the amount of revenue, profit before income tax, income tax paid and accrued, and the number of employees in each jurisdiction.

The CbC report should be prepared in English, and in case of any discrepancies between the English version and any other version, the English version shall prevail.

Penalties for Non-Compliance

Failure to comply with CbC reporting requirements in Barbados may result in penalties. Under the Income Tax Act, 1969, the penalty for non-compliance with the CbC reporting requirements is BBD 500,000 (approximately USD 250,000). Additionally, failure to provide accurate and complete information in the CbC report may result in an additional penalty of up to 1% of the annual consolidated group revenue.

Requirements for Multinational Groups

Multinational groups with Barbados-resident entities that are required to prepare and file a CbC report must appoint a reporting entity to file the report on behalf of the group. The reporting entity should be the ultimate parent entity of the multinational group unless:

• The ultimate parent entity is not required to file a CbC report in its jurisdiction of tax residence, or
• The tax authorities of the jurisdiction of tax residence of the ultimate parent entity have not entered into an agreement for the exchange of CbC reports with the Barbados tax authorities.

In these cases, another constituent entity of the multinational group may be designated as the reporting entity.

The multinational group should also appoint a surrogate parent entity to file the CbC report if the ultimate parent entity is not required to file a CbC report in its jurisdiction of tax residence or if the tax authorities of the jurisdiction of tax residence of the ultimate parent entity have not entered into an agreement for the exchange of CbC reports with the Barbados tax authorities.

Conclusion

In summary, CbC reporting is mandatory in Barbados for multinational groups with annual consolidated group revenue of at least USD 850 million. The CbC report must be filed electronically in XML format to the BRA and should provide comprehensive information on the activities, profits, and taxes paid by the multinational group in each jurisdiction where it operates. Non-compliance with CbC reporting requirements may result in penalties, and multinational groups should appoint a reporting entity and a surrogate parent entity to file the CbC report.

To comply with CbC reporting requirements in Barbados, multinational corporations should establish internal procedures to collect the necessary information and ensure that the reporting entity has access to this information. It is also essential to keep track of changes in regulations and reporting requirements in each jurisdiction where the multinational group operates.

Moreover, multinational corporations should consider the potential benefits of CbC reporting. CbC reporting can provide useful insights into the distribution of profits, taxes paid, and economic activities of the multinational group, which can be used to identify areas for improvement and optimize the group’s tax strategy. Additionally, CbC reporting can help build trust with tax authorities and other stakeholders by demonstrating a commitment to transparency.

In conclusion, complying with CbC reporting requirements is essential for multinational corporations operating in Barbados. By appointing a reporting entity and a surrogate parent entity, establishing internal procedures to collect the necessary information, and keeping track of changes in regulations, multinational corporations can ensure compliance with CbC reporting requirements and potentially benefit from the insights provided by CbC reporting.