The OECD has issued further interpretative guidance on the implementation of country-by-country (CbC) reporting to provide certainty to tax administrations and multinational enterprises (MNEs).
CbC reporting is part of a three-tiered approach to transfer pricing documentation (along with “master” and “local” files) developed under base erosion and profit shifting (BEPS) Action 13. These reports are to be automatically exchanged between tax administrations under relevant exchange arrangements.
The new guidance – issued on September 13 – includes questions and answers on the treatment of dividends received and the number of employees to be reported in cases where an MNE uses proportional consolidation in preparing its consolidated financial statements, which apply prospectively.
The updated guidance also clarifies that shortened amounts should not be used in completing Table 1 of a CbC report and contains a table that summarizes existing interpretative guidance on the approach to be applied in cases of mergers, demergers, and acquisitions.
The complete set of guidance concerning the interpretation of BEPS Action 13 issued so far is presented in the document. The document will continue to be updated with any further guidance that may be agreed, the OECD noted.