Mandatory Disclosure Reporting (MDR) DAC 6 – PART 3

In our last blog, we had given you a glimpse into some of the key processes that are involved in mandatory disclosure reporting. In this one, make a note of the final steps involved in ensuring that your report is up to speck and can be approved without any hassles.

Domestic arrangements

If one or many intermediaries or taxpayers are present in a country, then domestic arrangements for reporting purposes, shall apply. Reporting in one country is sufficient and reporting in other countries would not be necessary, if the arrangement is cross-border and comprised by the directive’s feature and at the same time regarded as a domestic arrangement in one or more jurisdictions.

Domestic reporting will be required if your or the tax payer’s involvement is in not more than one country.

The head of tax cannot assume an intermediary position for arrangements made by group companies domestically. The reporting liability more often than not, almost always rest with a local adviser or the local taxpayer.

It is also advisable to identify a specialist well versed with the formalities of reporting arrangements and has the professional skill to handle the tax affairs of the local jurisdiction, in close association with the head of tax authority.

Review of reports, to provide a basis for decision making

Following is a suggestive list for review and decision making:

Name, identification and details of intermediaries and tax payers.

Periodical status of arrangements that are in various stages of implementation.

Value of the arrangement

Currency involved

Details of arrangements

Local Regulations

The ultimate intermediary that would do the filing has to be agreed upon, between all participating intermediaries, in case there are many intermediaries. Further, information that is filed needs to be noted so that all participating intermediaries may take cognizance of these details and information.

The proof of filing must be documented; in case the filing is done by an external intermediary.

Timely decision has to be made, to make the head of tax a legal representative to file the documents, just in case, the representative intermediary does not file or otherwise unable to file them, for some reason.

It may also happen that the head of tax is unable to represent as an intermediary, due to many factors, like lack of involvement or current state of affairs or knowledge. In such cases the relevant groups must mutually agree to elect a suitable group representative, as a tax payer for all practical purposes, so as to file the documents.

A logical basis therefore, gets established, once the aforesaid steps are followed and carefully documented, for decision making.

Decision

It may so happen that many entities in the group may be participating in an arrangement, either as an intermediary or a tax payer and may be reporting on the same documents or arrangement.

A suitable decision in such cases is necessary, under the following conditions:

Entity that reports the arrangement.

Another entity in the same group, reporting the arrangement.

Reporting by an external intermediary, under conditions where the same is rendered not reportable for some reasons.

If the arrangement is reportable, then the same has to be done on time.

The head of tax function must install a carefully designed and well demonstrated process, after a careful review of the contributing factors, issues, concerns that has a relevance to the reporting.

The head of tax function must be an expert in understanding the problems and complex models of the member intermediaries, if any and come out with a dynamic reporting system, on an overall mutually beneficial working environment.

While doing the above, the head of tax must also ensure to obviate multiple filing of the reporting arrangements.

An automated system with continuous innovation, with provision to upgrade to current environment, from time to time, given the ever- increasing needs of the member intermediaries, would, probably be the solution to manage this complex work environment.

Having given you a detailed look and analysis at Mandatory Disclosure Reporting, we would like to let you know that DataTracks has experts who can ensure that you do not skip or miss out on any of the steps and stay out of a soup. We would be delighted to have a discussion to let you know how we can help. Visit our website or drop an email to enquiry@datatracks.co.uk