After publishing the survey to Action 13 of OECD BEPS promoting the transparency of transfer pricing documentations in September 2014 and a supplementary guideline in February 2015, the implementation package was also accepted at the meeting of May 27-28 of the Financial Commission of OECD and published in June.
The survey published last year, on which I reported in detail in an earlier post, contains the recommendation relating so-called “country-by-country” (CbC) reporting prescribing for multinational companies that in the countries in which they pursue business activities they shall report on an annual basis their key financial and other relevant business indexes as well as the identification and activity details of their related parties. The supplementary guideline published this February addressed specific practical aspects such as timeframes, exemptions, confidentiality, data inquiry obligations and the areas of use.
The implementation package published recently already contains specific wordings for legislations in relation to CbC-s both from a domestic and an international perspective.
The domestic legislation template prescribes for the ultimate parent company of the multinational company resident in the given state, among others, a CbC reporting obligation based on the template questionnaire published earlier. This domestic legislation template contains a directly integratable draft legislation of 8 articles in which free wording is allowed only for article 7 relating to penalties, taking into account the different penalty regulations of individual states.
In addition, the implementation package contains three different international CbC model conventions based on the following three types of international treaties on the exchange of information:
- the OECD Multilateral Competent Authority Agreement, a multilateral agreement for the automatic exchange of information developed by OECD and the G20 and signed on 29 October 2014 by 51 countries (and 10 further countries since then);
- OECD’s bilateral Double Taxation Treaties; and
- OECD’s Tax Information Exchange Agreements, which, similarly to the double tax treaties, are bilateral agreements but are based exclusively on inquiry-based (i.e. non-automatic) exchange of information.