The Isle of Man, as a committed member of the OECD’s Base Erosion and Profit Shifting (BEPS) framework, has implemented Country-by-Country Reporting (CbCR) to promote tax transparency and ensure the fair taxation of multinational enterprises (MNEs). The Isle of Man Treasury oversees these regulations, ensuring compliance with BEPS Action 13 requirements.

This guide provides an overview for CFOs and tax professionals of MNEs operating in the Isle of Man, covering CbCR applicability, reporting requirements, filing procedures, penalties for non-compliance, and resources.

Applicability of CbCR in the Isle of Man

Criteria for Reporting:
CbCR obligations in the Isle of Man apply to MNE groups that:

• Have annual consolidated group revenue exceeding £568 million (British pounds, equivalent to €750 million) in the preceding fiscal year.
• Include entities or permanent establishments located in the Isle of Man.

Local Filing Requirements:
A constituent entity in the Isle of Man may be required to file a CbC report if:

• It is the Ultimate Parent Entity (UPE) of the group, or
• It is designated as the Surrogate Parent Entity (SPE), or
• The UPE’s jurisdiction does not require CbCR or does not have an effective information exchange agreement with the Isle of Man.

Relevant Legislation:
The Isle of Man’s CbCR framework is governed under the Income Tax (Country-by-Country Reporting) Regulations 2017.

Reporting Requirements

Content of the CbC Report:
The CbC report must include key financial and tax data for all jurisdictions where the MNE operates, such as:

• Total revenues (related and unrelated party transactions),
• Profit or loss before tax,
• Income tax paid and accrued,
• Stated capital and retained earnings,
• Number of employees,
• Tangible assets other than cash.

Notification Requirement:

• All entities within the MNE group operating in the Isle of Man must notify the Isle of Man Treasury of the reporting entity’s identity and its tax jurisdiction.

Submission Platform:

• Reports must be submitted electronically via the Isle of Man Government Online Services platform using the OECD’s XML schema.

Resource:
Filing details and resources are available on the Isle of Man Government website: Isle of Man Government – Taxation.

Filing Deadlines

• CbC Reports: Must be filed within 12 months after the end of the MNE’s fiscal year.
  • Example: For a fiscal year ending 31 December 2023, the report must be filed by 31 December 2024.
• Notifications regarding the reporting entity are due no later than the last day of the fiscal reporting period.

Penalties for Non-Compliance

Penalties and Consequences:
Failure to comply with CbCR regulations in the Isle of Man may result in:

• Financial penalties for non-compliance, including late filing or incorrect submissions.
• Additional scrutiny and audits by the Isle of Man Treasury.

Mitigation:
Penalties may be reduced or waived if the taxpayer can demonstrate reasonable cause for non-compliance.

Confidentiality and Data Exchange

Data Protection:

• The Isle of Man ensures confidentiality of the CbC report, which is used solely for tax risk assessment.
• Information is exchanged only with jurisdictions that have operational tax treaties and agreements with the Isle of Man.