The OECD has published a memo that addresses both the type of information that should be reported in a country-by-country template and the administrative mechanisms that such information can be made available to jurisdictions. The topic will be discussed during a transfer pricing public consultation on 12 and 13 November 2013.
The OECD says one option could be to report net income (before tax) from each legal entity in a multinational group with numbers to be drawn from individual entity statutory financial statements. The benefit to such an approach would be that in jurisdictions where the preparation of such financials is required, taxpayers would have a simple and straight-forward mechanism for aggregating data. Alternatively, taxable income could be reported based on taxable income as reflected on tax returns filed in a jurisdiction.
One shortcoming with the approach, however, is that some companies within a multinational group may not be required to file their financial statement income on a tax return in any jurisdiction. The use of tax return information would also likely result in differences between tax and financial statement income because of book/tax differences in many jurisdictions.
[LTN 194, 8/10/13]