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What is CbC Report?
The Country-by-Country Report (CbCR) is part of the Action Plan 13 of the BEPS initiative of the OECD.
In essence, large multinationals have to submit an annual statement,
called Country by Country Report (CbC), in which it breaks down key elements of the states of each of the jurisdictions in which it has a presence.
The CbC report provide local tax authorities with visibility into profits, income, taxes paid and due, employees, capital, retained earnings, tangible assets and business activities.
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Who must file the CbCR?
The CbCR applies exclusively to multinational companies (MNEs) with income combined of 750 million € or its equivalent in the local currency of the jurisdiction include it in their regulations.
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When was the CbCR implemented?
This depends on the advances in regulatory matters made by each country in which will implement the CbCR, but the intention, on the recommendation of the OECD, is that the reports are required for fiscal years beginning on or after January 1, 2016 (FY 2016) and are must submit within 12 months of the end of the relevant year.
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Where should the CbC Report be submitted?
CbC Reports must basically be submitted where the address of the “ultimate
parent company” . However, if the ultimate parent’s country of domicile has not implemented the CbCR in its tax system, MNEs must present it in the country where your most important activities take place.
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When should CbC Reports be submitted?
The CbCR must be submitted 12 months after the end of each taxable year, starting with FY 2016, that is, with those starting on or after January 1, 2016.
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Why are CbCR necessary?
The CbCR provides information to tax authorities to help them identify and assess the risks of transfer pricing management by MNEs, as well as to make decisions about how to allocate your resources for tax audits.
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Could other sectors be included?
Additional reporting obligations are being implemented in sectors such as banking and extractive industries. Other sectors could be included soon.
Additionally, some jurisdictions have proposed initial discussions to consider mandatory public disclosure of information contained in CbCRs for MNEs.
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What can companies do to prepare for the CbCR?
Companies will need to assess how they will collect the required information from different sources and what will be the best technology to help their organizations bring it together and create the required reports.
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How should the information be collected?
There is no specific requirement on how the information should be collected, but you must take into account that the combined data of the group will have to be consolidated in a single report, whereby, to the extent that data collection can be standardized, the process will be more efficient.
The collection of information, therefore, may be carried out by different methods, including consolidation systems, MS office software (Excel, SharePoint), etc.
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How much time takes the implementation of a data solution?
Set up a system and process well-planned data addition takes your time. In our experience, companies can usually take between 6 to 9 months to implement a collection process of information if it did not exist previously.
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How much time takes te implementation of a CbC Reporting solution?
Once the collection of information process is done, we can implement a solution to file the requirements in 1 to 3 months.
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What data may need to be reported?
Under the OECD model this data may be (depending on the country):
- Effective Tax Rate (ETR) and Cash ETR
- Percent of related revenues to total revenue
- Number of employees
- Unrelated party revenues
- Profit before tax
- Stated capital
- Tangible assets
- Tax jurisdiction
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Should I gather the info to file the CbC Reporting even if my company is not oblied to do the presentation?
While some organizations may not be required to submit the Country by Country Report (CbCR) according to tax regulations, collecting the necessary information to prepare this report can bring a range of significant benefits that go beyond regulatory compliance.
Read more about this here.
CbC Reporting 