Ad

Guernsey, as an international financial centre, has committed to international tax transparency and aligned its tax laws with the OECD’s Base Erosion and Profit Shifting (BEPS) framework, specifically Action 13 on Country-by-Country Reporting (CbCR). This guide is designed for Chief Financial Officers (CFOs) and financial executives of multinational enterprises (MNEs) in Guernsey to understand their CbCR obligations, including applicability, reporting requirements, penalties for non-compliance, and helpful resources for compliance.

Applicability of CbCR in Guernsey

Criteria for Reporting:

• CbCR applies to multinational enterprise (MNE) groups with consolidated revenue of €750 million or more in the preceding fiscal year.
• The ultimate parent entity of an MNE group that is tax resident in Guernsey is responsible for filing the CbC report.
• If the ultimate parent is in a jurisdiction that does not require CbCR or does not exchange reports, a surrogate parent entity in Guernsey may be required to submit the report.

Relevant Legislation:

• Guernsey introduced CbCR as part of its domestic law through the Income Tax (Approved International Agreements) (Implementation) (Country by Country Reporting) Regulations, 2017.
• Further details and the full legal framework can be accessed on the States of Guernsey Income Tax Office website.

Reporting Requirements

Information to be Reported:

• The CbC report must contain financial data for each jurisdiction in which the MNE operates. This includes revenue, profit or loss before tax, income taxes paid and accrued, capital, accumulated earnings, number of employees, and tangible assets.
• The report must also include information on all constituent entities within the MNE group, identifying their tax jurisdiction and main business activities.

Form and Submission:

• The CbC report must be prepared and submitted in XML format, consistent with the OECD’s standard electronic format for CbCR submissions.
• The report is submitted electronically to the Guernsey Revenue Service using its designated online portal.
  • Filing instructions can be found on the States of Guernsey Revenue Service website.

Filing Deadlines

• The CbC report must be filed within 12 months after the end of the MNE group’s fiscal year. For instance, if the fiscal year ends on 31 December 2023, the report must be submitted by 31 December 2024.
• MNEs in Guernsey that are not responsible for filing the report must notify the Guernsey tax authorities of which entity is filing the report and where it will be submitted.

Penalties for Non-Compliance

Penalties:

• Failure to comply with CbCR obligations in Guernsey, including failure to file the report, providing inaccurate information, or failing to notify authorities about the reporting entity, can result in significant penalties.
• Non-compliance can attract penalties of up to £50,000 depending on the type and seriousness of the violation.

Defences:

• MNEs may avoid penalties if they can show that non-compliance was due to reasonable cause, such as technical issues or genuine mistakes. Each case is reviewed by the tax authorities on its merits.

Confidentiality and Use of Information

Data Protection:

• Guernsey complies with the OECD’s confidentiality guidelines regarding CbCR data. The information provided in the CbC reports is shared only with tax authorities in jurisdictions that have signed the appropriate competent authority agreements with Guernsey.
• The reports are used for risk assessment purposes by tax authorities and are not made publicly available.