On Tuesday 22.3.16, the OECD released its standardised electronic format for the exchange of Country-by-Country (CbC) Reports between jurisdictions – the CbC XML Schema – as well as the related User Guide. The CbC XML Schema is part of the OECD’s work to ensure the swift and efficient implementation of the BEPS measures.
CbC Reports, to be electronically transmitted between Competent Authorities in accordance with the CbC XML Schema, will assist tax administrations in obtaining a complete understanding of the way in which Multinational Enterprises (MNEs) structure their operations, by annually providing them with key information on the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.
The information to be included in the CbC Report will be collected by the country of residence of the Reporting Entity for the MNE group, and will then be exchanged under the relevant international exchange of information agreement, in particular the Multilateral Competent Authority Agreement on the Exchange of CbC Reports, in the format of the CbC XML Schema. First exchanges of CbC Reports will start in 2018, with information on the year 2016. The CbC reporting template does not apply to groups with annual consolidated revenue in the immediately preceding fiscal year of less than €750 million.
The CbC XML Schema User Guide further explains the information required to be included in each data element to be reported. It also contains guidance on how to make corrections of data element within a file.
While the CbC XML Schema has been primarily designed to be used for the automatic exchange of CbC Reports between Competent Authorities, the OECD says the Schema can also be relied upon by Reporting Entities for transmitting the CbC Report to their tax authorities, provided the use of the CbC XML Schema is mandated domestically.
[OECD website] [LTN 56, 23/3/16]