Country by country reporting

The final guidance from the Organisation for Economic Co-operation and Development (OECD) on transfer pricing documentation and country by country reporting (CbCR) represents a significant development for today’s multinational enterprises (MNEs). The OECD has stated that it would expect the CbCR data to be available by the end of 2017 in respect of financial years beginning on or after 1 January 2016. CbCR will require MNEs to provide information on their global allocation of profit, taxes paid, and certain indicators of economic activity among the countries in which they operate.

Initially seen as purely a compliance burden, this view has quickly evolved as it’s becoming more apparent that CbCR may cause significant transparency, technical, operational and systems challenges to businesses. As a result, many companies are planning their response to CbCR now. Engagement at Board level early on will be crucial and your organisation’s ability to comply with such detailed data requests, combined with the sensitivity of the information to be provided, makes this development a significant issue for senior management.