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OECD Documents on Country-by-Country Reporting

The OECD has issued various guidance on the implementation of Country-by-County (CbC) reporting, which, along with the Master File and the Local File, comprises the OECD's three-tiered approach to transfer pricing documentation. The OECD's approach to documentation results from its work on Action 13 of the BEPS project.

    The OECD issued Guidance on the Appropriate Use of Information Contained in Country-by-Country Reports. In discussing the meaning of "appropriate use," the report states that "information contained in CbC Reports may be used for high level transfer pricing risk assessment, but should not be used by itself as a basis for proposing changes to transfer prices or adjusting a taxpayer's income using global formulary apportionment. However, there is nothing to prevent a tax authority from using CbCR information in planning a tax audit or as the basis for making further enquiries, into the group's transfer pricing arrangements or other tax matters, in the course of an audit." (September 2017)
    The OECD's Handbook on Effective Implementation is described as "a practical guide to the key elements that countries need to keep in mind when introducing CbC Reporting, including technical issues related to the filing, exchange and use of CbC Reports, as well as practical matters that tax authorities will need to deal with." (September 2017)
    The OECD's Handbook on Effective Tax Risk Assessment provides tax authorities "with guidance on ways to incorporate information obtained under CbC Reporting into their tax risk assessment processes, the types of tax risk indicators that may be identified using CbC Reports, and the challenges that may arise in the process." (September 2017)
    The OECD released Guidance on the Implementation of Country-by-Country Reporting (CbC). Under CbC, multinational enterprises are required to provide aggregate information annually, in each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the group. The guidance provides suggestions regarding transitional filing options, guidance on the application of CbC to investment funds and partnerships, and the impact of exchange rate fluctuations on the agreed 750 million euro filing threshold. (June 2016; updated September 2017)
    The OECD released its standardized electronic format for the exchange of Country-by-Country Reports between jurisdictions, in the form of the CbC XML Schema and the related User Guide. The information to be included in the CbC Report will be collected by the country of residence of the Reporting Entity for the multinational group, and will then be exchanged under the relevant international exchange of information agreement in the format of the CbC XML Schema. The first exchanges of the CbC Reports will start in 2018, with information on the year 2016. The User Guide further explains the information required to be included in each data element, as well as guidance on how to make corrections to data within a file. (March 2016, updated September 2017)
    The OECD issued Peer Review Documents on Action 13 (Country-by-Country Reporting). These documents relate to conducting peer review of the legal and administrative framework put in place by a jurisdiction to implement the CbC reporting standard. (This peer review is a separate exercise to the 2020 review to evaluate whether modifications to the CbC reporting standard should be made.) Included is a description of the methodology for conducting the peer review, such as the sources of information (e.g., self-assessment questionnaire, information from peers, information provided to the OECD), timelines for the stages of the review, and the review process.(February 2017)

OECD Issues Revised Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations

The OECD issued a 2017 edition of its Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. A read-only version of the Guidelines can be found on the OECD's web site at the above link. The 2017 edition incorporates the revisions agreed to as a result of the OECD's BEPS Reports on Actions 8-10 and Action 13, as well as other revisions.
July 2017

OECD Discussion Draft and Public Comments: Implementation Guidance on Hard to Value Intangibles

The OECD issued a Discussion Draft and solicited public comment on its implementation guidance on hard to value intangibles (HTVI). This project stems from Action 8 of the BEPS Action Plan, which mandated the development of transfer pricing rules or special measures for transfers of HTVI aimed at preventing base erosion and profit shifting by moving intangibles among group members. The OECD's guidance ensures that tax administrations can consider ex post outcomes as presumptive evidence about the appropriateness of the ex ante pricing arrangements, while also giving the taxpayer the possibility to rebut such presumptive evidence by demonstrating the reliability of the information supporting the pricing methodology adopted at the time the controlled transaction took place. The Discussion Draft presents the principles that should underlie the implementation of the HTVI approach. The OECD also posted the comments it received on the Discussion Draft.
May 2017 and July 2017

OECD Discussion Drafts: Additional Guidance on the Attribution of Profits to Permanent Establishments; and Revised Guidance on Profit Splits

    In June 2017, the OECD issued a new discussion draft on BEPS Action 7 -- Additional Guidance on Attribution of Profits to Permanent Establishments. The discussion draft sets out high level general principles for the attribution of profits to permanent establishments in the circumstances addressed by the Report on BEPS Action 7. Comments were requested on the proposed guidance in the discussion draft on the application of Article 7 of the OECD Model Tax Convention to determine the attribution of profits to permanent establishments.
    In June 2017, the OECD issued a revised discussion draft on BEPS Action 10 -- Revised Guidance on Profit Splits. The discussion draft is intended to clarify the application of the transactional profit split method, for example by identifying when it would be the most appropriate transfer pricing method and determining the profits to be split. Comments were requested on any aspect of the revised draft, but also on specific issues (e.g., using anticipated vs. actual profits).
    Comments on the two discussion drafts were requested by September 15, 2017. The OECD intends to hold a public consultation on these topics in November 2017.

IMF, OECD, UN and World Bank Create Platform for Collaboration on Tax

The International Monetary Fund, Organization for Economic Cooperation and Development, United Nations and World Bank have issued a Concept Note regarding their Platform for Collaboration on Tax, created as a vehicle for enhanced cooperation between the participating organizations. The Concept Note establishes 5 areas within which output will be generated and published by the Forum; (i) Develop appropriate tools for developing countries in the taxation of Multinational Enterprises, including in relation to the new measures from the BEPS reports; (ii) Support interested developing countries to participate in the implementation of the BEPS package and input into future global standard setting on international taxation; (iii) Capacity development issues; (iv) Improving awareness to build comprehensive and effective exchange of information mechanisms; and (v) Taxation and the ‘informal’ economy. The Forum also establishes a priority of information sharing and coordination among the members, particularly regarding high-priority tax issues. (See also Global Resources page, World Bank section.)
April 19, 2016

OECD Releases Final BEPS Reports

On October 5, 2015 the OECD released the final reports created in response to the G20/OECD Base Erosion and Profit Shifting project, originally undertaken in 2013. The Explanatory Statement includes a summary of the project as well as a discussion of its significance in the context of international taxation and next steps. The BEPS package includes:

Action 1 – Address the Tax Challenges of the Digital Economy
Action 2 – Neutralise the Effects of Hybrid Mismatch Arrangements
Action 3 – Strengthen Controlled Foreign Company Rules
Action 4 – Limit Base Erosion via Interest Deductions and Other Financial Payments
Action 5 – Counter Harmful Tax Practices More Effectively
Action 6 – Prevent Treaty Abuse
Action 7 – Prevent the Artificial Avoidance of Permanent Entity Status
Actions 8-10 – Assure that Transfer Pricing Outcomes are in Line with Value Creation
Action 11 – Measuring and Monitoring BEPS
Action 12 – Require Taxpayers to Disclose their Agressive Tax Planning Arrangements
Action 13 – Re-examine Transfer Pricing Documentation
Action 14 – Make Dispute Resolution Mechanisms More Effective
Action 15 – Develop a Multilateral Instrument

OECD White Paper on Transfer Pricing Documentation

This White Paper on Transfer Pricing Documentation surveys the current state of affairs regarding transfer pricing documentation, considers the purposes and objectives of transfer pricing documentation, and makes suggestions as to how transfer pricing documentation rules might be modified to make transfer pricing compliance simpler and more straightforward, while at the same time providing tax authorities with more focused and useful information for consideration in connection with transfer pricing risk assessment and transfer pricing audits.
July 30, 2013

OECD Action Plan on Base Erosion and Profit Shifting

Offers a global roadmap that will allow governments to collect the tax revenue they need to serve their citizens. It also gives businesses the certainty they need to invest and grow. Produced at the request of the G20 and introduced at the G20 Finance Ministers’ meeting in Moscow, the Action Plan identifies 15 specific actions that will give governments the domestic and international instruments to prevent corporations from paying little or no taxes.
July 19, 2013

OECD Approves the Revision of Section on Safe Harbors in the Transfer Pricing Guidelines

New guidance on safe harbors provides opportunities for countries to relieve some compliance burdens and to provide greater certainty for cases involving smaller taxpayers or less complex transactions. With that, it provides a basis for countries, especially developing countries, to design a transfer pricing compliance environment that makes optimal use of the limited resources available.
May 21, 2013

Multi-Country Analysis of Existing Transfer Pricing Simplification Measures 2012 Update

The survey described in this document focuses specifically on simplification measures countries have adopted as part of their transfer pricing regimes as of January 1, 2012. These include not only safe harbours but also measures such as less stringent documentation requirements, alleviated penalties, streamlined procedures, etc. This document contains both an analysis of the key findings from the survey and a compilation of the country responses.
June 6, 2012

OECD Dealing Effectively with the Challenges of Transfer Pricing

This report is concerned with the practical administration of transfer pricing programs by tax administrations. It discusses ways in which the management of transfer pricing programs can be optimized, so that transfer pricing audits and enquiries are conducted efficiently and in a timely manner. It is concerned with the practical steps tax administrations need to take to correctly identify transfer pricing cases that merit audit or enquiry and then to progress those cases to as early a conclusion as possible.
January 2012

OECD's 6th Meeting on Tax Administration - Joint Audit Report

This report was commissioned by the Forum on Tax Administration (FTA) and sets out the findings and recommendations based on a project to examine how international cooperation could be advanced through the use of joint audits among Participating Countries.
September 15/16, 2010

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