OECD highlights common errors in Country-by-Country Reports

The report underscores the importance of accuracy in CbC reporting, as errors can trigger tax audits and penalties, urging MNEs to strengthen their reporting process.

The Organisation for Economic Co-Operation and Development (hereinafter also referred to as “OECD”) has published a report in May 2025 on common errors in the preparation of Country-by-Country Reports (hereinafter also referred to as the “OECD Report”). The Country-by-Country (hereinafter also referred to as “CbC”) Reports provide key data for every tax jurisdiction in which a multinational enterprise (MNE) group does business, such as income distribution, taxes paid and economic activity across jurisdictions. They are structured by a message header with the sender, recipient, message type and reporting period as well as the identifying information to be provided for each constituent entity and the b​ody of the CbC Schema, containing the reportable information on the reporting entity and each constituent entity also with a summary of the activities of the MNE group. Additionally, they include three tables, Table 1 being an overview of allocation of income, taxes and business activities by tax jurisdictions, Table 2 being a list of all the constituent entities of the MNE group included in each aggregation per tax jurisdiction and Table 3 with general additional information.

The OECD Report displays that tax administrations have identified common errors in submitted reports, such as issues with missing or incorrect Tax Identification Numbers (hereinafter also referred to as “TINs”) as well as mistakes in the compilation of Table 1 like usage of multiple currencies, shortened/lengthened numbers, excessive rounding, input into the wrong column, duplicating amounts from the preceding reporting period or total revenues being higher or lower than the party revenues or than the applicable threshold. Furthermore, the OECD Report displays that errors also happen in regard to Table 2 such as incorrect jurisdiction codes, different jurisdictions being listed, leaving out (non-) consolidated constituent entities, wrong or not specified main business activity and wrongly named permanent establishments. Moreover, there are mistakes regarding the filing of CbC Reports such as including data on only one tax jurisdiction, two reports being filed by the same MNE group, filing by a subgroup or the reporting period being over 12 months. Finally, the OECD Report points out that mistakes in the provision of the general information section occur as well such as indicating an incorrect reporting year date, lack of information on the exchange rate or incorrectly displaying the income tax paid.

Error detection methods implemented by tax administration to spot errors and mistakes include automated checks at submission using XML schema validations, post-filing reviews before data exchange, and checks by receiving jurisdictions. When errors are detected, MNEs must amend their reports accordingly.

MNEs that are required to prepare a CbC Report should carefully review the most commonly committed errors and put an increased focus on the groundwork exercise to ensure that the report is prepared correctly and avoid potential penalties that could result from the erroneous construction of the report.

Further, it should be pointed out that the publication of the OECD Report is an indication that tax administrations are carefully reviewing the CbC Reports prepared by the taxpayers and it is to be expected that they will use the insight gained from reviewing these reports as a starting point for tax audits.