BEPS: Increased Transparency for Multinationals Set to Begin as CbC Reporting and Exchange of Information Deadlines Approach

2018 Whole Ball Of Tax

Wolters Kluwer Provides Latest Update on BEPS

(NEW YORK, NY, January 2018) — The Organization for Economic Cooperation and Development (OECD)’s base erosion and profit shifting (BEPS) initiative targets tax avoidance and sets forth recommendations for increasing tax transparency. As part of these recommendations, countries across the globe, including the United States and the European Union, have implemented new compliance requirements like country-by-country (CbC) reporting.

CbC reporting is currently underway with the first filings set to be automatically exchanged in June. This exchange of information is set to provide tax administrations around the world access to key information on the annual income and profits, capital, employees, and activities of multinational groups that are active within their jurisdictions.

With less than six months before the first exchange deadline, there are now over 1,400 automatic exchange relationships in place among jurisdictions committed to exchanging CbC reports. These include those under EU Council Directive 2016/881/EU and bilateral competent authority agreements.

The United States is entering into its own competent authority arrangements for the automatic exchange of CbC reports with other jurisdictions that have agreed to a double taxation agreement (DTA) or a tax information exchange agreement (TIEA) with the United States. Currently, over 30 agreements are already in place with negotiations being conducted with additional jurisdictions.

“These agreements will allow U.S. multinationals to file their reports in the United States rather than directly with foreign jurisdictions,” said Joy Hail, International Tax Analyst for Wolters Kluwer Tax & Accounting. “However, this also means that an increasingly greater amount of data will be exchanged between jurisdictions, giving tax authorities a more thorough picture of these complex entities and exposing them to a greater risk of audit.”

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