Country-by-Country exchange relationships

Published on June 8, 2017

According to BEPS Action 13 (”2015 Final Report – Transfer Pricing Documentation and Country by Country Reporting”) countries should adopt a standardized three-tiered approach to transfer pricing documentation in their domestic law, comprising of a Local file, Master file and a Country by Country Report (CbCR). The CbCR (applicable only for MNEs with annual consolidated group revenue equal to or exceeding EUR 750 million) delineates aggregate tax jurisdiction-wide information relating to the global allocation of the income, the taxes paid, and certain indicators of the location of economic activity among tax jurisdictions in which the MNE group operates. Through automatic exchange of information the jurisdiction of tax residence of the ultimate parent entity is capable of sharing the report with other jurisdictions in which the MNE group operates to ensure a successful identification of profit shifting between jurisdictions.
 

Currently the OECD published a section which shows all bilateral exchange relationships that are in place for the automatic exchange of CbCR between tax authorities, including the legal basis and the effective date and/or the activation date. Furthermore a number in brackets behind each jurisdiction indicates the total number of bilateral exchange relationships that are currently activated with respect to that jurisdiction.
 

Over 700 bilateral exchange relationships have been activated with respect to more than 30 jurisdictions committed to exchanging CbCR and even more agreements of automatic exchange of CbCR under the Multilateral Competent Authority Agreement (”CbC MCAA”) will follow. The OECD will update their page regularly as further jurisdictions activate their bilateral exchange relationships to provide clarity for MNE groups and tax administrations.