Turks and Caicos, as a British Overseas Territory, is committed to international tax transparency and follows global standards to combat tax avoidance and base erosion. While not a member of the OECD, Turks and Caicos complies with several international agreements, including the OECD’s Base Erosion and Profit Shifting (BEPS) framework and BEPS Action 13, which sets out guidelines for Country-by-Country Reporting (CbCR). This guide provides detailed information for CFOs and multinational enterprises (MNEs) operating in or through Turks and Caicos, outlining the applicability of CbCR regulations, reporting obligations, penalties for non-compliance, and available resources.

Applicability of CbCR in Turks & Caicos

Criteria for Reporting:

• The CbCR framework in Turks and Caicos applies to multinational enterprise (MNE) groups with consolidated group revenues of at least USD 850 million in the preceding fiscal year.
• If the ultimate parent entity of the MNE group is a tax resident in Turks and Caicos, it is responsible for filing the CbC report.
• A local subsidiary or constituent entity in Turks and Caicos may also be required to submit a CbC report if:
  • The parent entity is based in a jurisdiction that does not require CbCR,
  • There is no agreement in place for the exchange of CbC reports between Turks and Caicos and the parent entity’s jurisdiction, or
  • There is a systemic failure in the automatic exchange of CbC reports with the relevant country.

Relevant Legislation:

• CbCR requirements in Turks and Caicos are in line with the international standards set by the OECD under BEPS Action 13. Although there is no local legislation specific to CbCR, compliance is enforced through existing tax and financial transparency agreements, particularly those with the United Kingdom and other countries with tax cooperation frameworks.

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Reporting Requirements

Information to be Reported:

• MNE groups must file a CbC report that includes details on their global operations and tax obligations in each jurisdiction, such as:
  • Total consolidated revenue (including related-party and unrelated-party revenue),
  • Profit or loss before income tax,
  • Income tax paid and accrued,
  • Capital and retained earnings,
  • Number of employees,
  • Tangible assets other than cash or cash equivalents.
• Additionally, a list of all constituent entities within the MNE group must be provided, along with their respective tax jurisdictions and their main business activities.

Form and Submission:

• The CbC report should follow the OECD XML schema, which is the standard format for filing.
• The report is submitted to the Turks and Caicos Ministry of Finance or relevant competent authority, which oversees the exchange of financial and tax information under global tax transparency agreements.

Filing Deadlines

• The CbC report must be filed within 12 months after the last day of the reporting fiscal year of the MNE group. For instance, if the fiscal year ends on 31 December 2023, the CbC report must be submitted by 31 December 2024.
• Additionally, any constituent entity in Turks and Caicos must notify the authorities of the identity and tax residency of the reporting entity (whether it is the ultimate parent or a surrogate parent entity) before the fiscal year-end.

Penalties for Non-Compliance

Penalties:

• Non-compliance with CbCR obligations can lead to significant penalties, including:
  • Fines for failure to file the CbC report on time or for inaccurate information in the report. These penalties can range from USD 5,000 to USD 50,000.
  • Additional fines may be imposed for failure to notify the authorities about the reporting entity or for not meeting other procedural requirements.

Defences:

• Penalties may be reduced or waived if the taxpayer can prove that non-compliance was due to reasonable cause, such as technical difficulties or exceptional circumstances. However, entities are expected to ensure timely compliance through proper planning and preparation.

Confidentiality and Use of Information

Data Protection:

• CbC reports submitted to the competent authority in Turks and Caicos are treated as confidential and are primarily used for risk assessment by the tax authorities.
• As part of its participation in global tax transparency initiatives, Turks and Caicos will share CbC reports with tax authorities in other jurisdictions, provided the information exchange meets the OECD confidentiality standards and data protection rules.