- The United States on IRS.gov lists 55 jurisdictions with which its competent authority has signed or is negotiating bilateral arrangements to automatically exchange tax information from big multinational companies’ country-by-country reports. The Organization for Economic Cooperation and Development in a new report recommends the US keep working to sign more such deals.
- The OECD Monday released its latest report on progress by jurisdictions in the global inclusive framework on implementing country-by-country reporting, a key transparency action in the international plan to make sure big corporate groups pay taxes in the countries where they operate and earn income.
- The minimum standard under action 13 in the OECD plan to fight base erosion and profit shifting requires tax administrations to collect and share detailed information on all large multinational companies doing business in their country. Information collected includes the amount of revenue reported, profit before income tax, and income tax paid and accrued, as well as the stated capital, accumulated earnings, number of employees and tangible assets, broken down by jurisdiction.
- The OECD says some 136 of 140 jurisdictions in the framework have collectively established more than 3,300 bilateral relationships for the exchange of CbC reports.
- It says over 110 jurisdictions have already introduced legislation to impose a filing obligation on MNE groups, covering practically all multinational groups with consolidated group revenue at or above the BEPS action’s threshold of 750 million euros ($796 million).
- The report doesn’t compare progress by major jurisdictions.
Doesn’t Require Filing in Foreign Jurisdictions
- The US Internal Revenue Service says entities of US multinational groups with $850 million or more of revenue in a previous annual reporting period must file the form 8975 country-by-country report to the IRS.
- However, the IRS states that, based on the OECD model legislation for CbC reporting, a US multinational group’s foreign subsidiaries could only be subject to a local filing requirement in a foreign tax jurisdiction in certain circumstances.
- According to the new OECD report, the United States is the only Group-of-Seven country that does not have a local filing requirement for multinationals. Canada, France, Germany, Italy, Japan, and the UK all have such requirements, according to the report.
- The IRS says it will exchange form 8975 information automatically with tax authorities with which the United States enters into a bilateral competent authority arrangement. However, a US multinational group’s information will only be exchanged with countries in which the US group reports doing business.
- The IRS lists 55 countries with which it has signed or is in negotiations to sign bilateral competent authority arrangements to automatically exchange country-by-country data. Those arrangements are based on double taxation conventions, tax information exchange agreements, or the Convention on Mutual Administrative Assistance in Tax Matters, which permit such exchanges, it said.
- The OECD said the new report repeats its earlier recommendation that the United States actively work toward signing such arrangements. It first made the recommendation to the US in a 2017/2018 peer review.
- The OECD said it will release another country-by-country peer-review report about a year from now. (OECD.org)
