The “Country by Country” report offers a breakdown of an entity’s financial and operational details for each operating jurisdiction. It is primarily designed to assist tax authorities in understanding the nature of transactions within their jurisdictions. This report does not offer advice on tax compliance or strategies. Users are encouraged to consult with professional advisors for specific guidance tailored to their circumstances.
Who Has to File Country-by-Country Reporting?
Multinational Enterprises (MNEs): The primary criterion for CbCR is the entity’s status as a large MNE. Such MNEs are compelled to prepare and submit CbC reports irrespective of their operational scope.Across the European Union, Intrastat reporting especially follows a monthly measure. These filings usually correspond with VAT return submissions and are directed to the respective statistical office of the concerned country.
What is Included in Country-by-Country Reporting?
The Value Proposition of CbCR with RTC Suite
With the world inclenationing heavily towards tax transparency, understanding and joining to CbCR becomes paramount for MNEs. RTC Suite’s innovative platform simplifies:
What Is Country-by-Country Reporting?
Country-by-Country Reporting (CbCR) represents a pivotal shift in international taxation, offering unprecedented transparency. It’s a reporting mechanism mandated by the OECD under the Base Erosion and Profit Shifting (BEPS) Action Plan. Essentially, CbCR requires multinational enterprises (MNEs) to report income, taxes, and other key financial data for each country where they operate. This form of reporting shines a spotlight on tax planning strategies used by MNEs, aiming to curb tax avoidance and ensure a fair distribution of tax revenues.
Who needs to file CbCR?
CbCR obligations fall primarily on MNEs with consolidated group revenue exceeding a certain threshold, generally €750 million or its equivalent. These entities must file detailed reports, breaking down financial data for each jurisdiction they operate in. This requirement applies not just to the parent companies but also to subsidiaries and affiliates, depending on the rules of the specific country.
CBC Reporting Obligations
The reporting obligations under CbCR are comprehensive. MNEs must disclose a range of data, including revenue generated, pre-tax profit or loss, income tax paid and accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents. These details are crucial for tax authorities to assess where economic activity is taking place and where taxation should rightfully occur.
When will CbCR be implemented?
CbCR is already in effect in many countries, with implementation dates varying globally. Since its introduction in the BEPS Action Plan, numerous countries have swiftly adopted CbCR, aligning their local laws with OECD guidelines. Businesses should consult specific national regulations to determine the exact implementation timelines. The exact date of implementation can vary from country to country, with some nations adopting the practice shortly after the OECD’s recommendations, while others took longer.
Why are CbC Reports Needed?
CbC reports are a cornerstone in the fight against tax avoidance. By requiring detailed reporting, tax authorities can better understand where profits are being made and where taxes are being paid. This increased transparency aims to prevent profit shifting and base erosion, ensuring that companies contribute their fair share of taxes in the markets where they truly operate.
When will CbC reports need to be filed?
Filing deadlines for CbC reports vary by country but are generally required annually. In many jurisdictions, the report is due within 12 months after the end of the reporting fiscal year of the MNE group. Businesses should be attentive in understanding the specific deadlines in each jurisdiction to ensure timely compliance.
Where is a CbC report filed?
The primary CbC report is typically filed in the jurisdiction where the MNE’s ultimate parent entity resides. However, under certain conditions such as the lack of an information exchange agreement, secondary filing may be required in other jurisdictions. It’s essential for MNEs to understand the global landscape of CbCR to navigate the complexities of where and how to file.
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