UK and International Tax news
Country By Country Reporting
Thursday 10th March 2016
HMRC has recently issued The Taxes (Base Erosion and Profit Shifting) (Country-by-Country Reporting) Regulations 2016 [237/2016] which come into force on 18 March 2016.
The Regulations put into effect the UK’s undertaking to introduce CbC reporting for multinational enterprises. Parent entities of multinational enterprises with consolidated group revenue of €750m or more in an accounting period that commences before, and ends on or after 31 December 2015 or which commences on or after 1 January 2016, will be required to file CbC reports for the next accounting period.
The requirements in the Regulations implement recommendations on CbC reporting set out in a report on Transfer Pricing Documentation and Country-by-Country Reporting published by the OECD on 5 October 2015.
The Regulations also introduce a filing requirement for entities of a foreign-headed multinational resident in the UK for tax purposes or with a permanent establishment in the UK to file a version of the CbC report in the UK where the information would not otherwise be reported to or received by HMRC.
There is also an option for any entity of a foreign-headed multinational enterprise to file a CbC report for the group with HMRC on a voluntary basis.
In accordance with the OECD template, parent entities of multinationals which have to file a report will be required to provide the following information for each tax jurisdiction in which they do business – the amount of revenue, profit before income tax and income tax paid and accrued, and also their total employment, capital, retained earnings and tangible assets.
They will also be required to identify each entity within the group doing business in a particular tax jurisdiction and to provide an indication of business activities within a selection of broad areas which each entity engages in. CbC reports will be automatically shared by relevant countries in accordance with international agreements governing the exchange of information.
The CbC report or the UK CbC report, as appropriate, will be filed electronically and its form and content will follow the template developed by the OECD. This will be specified in directions when work to develop electronic versions of the reporting templates and a transmission method is complete and in time for reports to be filed in accordance with the time limits set out in the Regulations.
For further details on the above Regulations, please contact Keith Rushen on 0207 486 2378.
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