Things you should know about country-by-country reporting (CbCR)

What is Country-by-Country Reporting and who are the OECD?

The Organisation for Economic Cooperation and Development (OECD) is a forum that involves the governments of 35 member countries working alongside those of other 70 non-member countries, all with the aim of promoting sustainable development as well as significant economic growth. With the advent of so many businesses over the years, issues pertaining to international taxes have been part of almost every political agenda. This is because some multinational enterprises (MNEs) tend to exploit loopholes in international tax rules, given that these rules were implemented so long ago that they’ve grown outdated in context of the current state of affairs. These loopholes are what gave way to things like Base Erosion Profit Shifting (BEPS), hurting the economies of all the countries involved. In order to minimize damages, the Action 13 report has put in place a template that any MNE transacting internationally is required to report all their annual business transactions in. This is what a Country-by-Country (CbC) report is.

What does it mean for multinational companies?

The very first implementation of CbCR goes as far back as the 1st of January 2016, but there are some countries still in the process of passing the mandate into effect. So even if a country that’s relevant to an MNE doesn’t have a CbCR mandate right now, it’s safe to assume that it’s coming soon and wise to be prepared to comply.

In countries that have already implemented CbC reporting, companies will be expected to file their first Form 8975 within twelve months of the time of implementation. The only exception to this rule is that MNEs with an annual revenue less than €750 million (or equivalent in domestic currency), in the previous fiscal year, are exempted. Any MNE’s location that has control over about 90% of the corporate revenue will be expected to pay and comply with local tax regulations.

What are the requirements to file a CbC report?

Considering the fact that filing any such report is a huge undertaking, requiring large reserves of data, a crucial requirement when filing a CbCR is your readiness and aptitude to collect and process said data. During this process, some vital questions you’ll need to ask and answer are:

  • How will the information be gathered?
  • What technology is best suited for gathering and processing this information?
  • Who will own the overall responsibility?
  • Are we capable of meeting the deadline by ourselves?

More often than not, it helps to have the assistance of people who’ve done this before and have done it well. DataTracks offers a comprehensive CbCR solution that not only simplifies the entire process, but lets you meet deadlines effortlessly without compromising on the accuracy of your documents.