Thursday, February 6, 2020
The OECD has released a public consultation document as part of a review into the new transfer pricing documentation rules introduced as part of BEPS Action 13.
Action 13 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project (BEPS Action 13) established a three-tiered standardized approach to transfer pricing documentation, including a Country-by-Country Report (CbC report) that provides details of an MNE group's revenues, profit before tax, tax accrued, and other information relevant to a high level risk assessment, for each tax jurisdiction in which the MNE group has a constituent entity.
Country-by-Country reporting (CbC reporting) is one of four BEPS minimum standards that all members of the BEPS Inclusive Framework are committed to implementing.
The BEPS Action 13 report also included a requirement that a review of the CbC reporting minimum standard be completed by the end of 2020 (the 2020 review).
On February 6, 2020, the Inclusive Framework released on the OECD website a public consultation document (also available in French) on matters where its members seek input from stakeholders in conducting this 2020 review.
The public consultation document comprises three chapters: Chapter 1 contains general topics concerning the implementation and operation of BEPS Action 13; Chapter 2 contains topics concerning the scope of CbC reporting; and Chapter 3 contains topics concerning the content of a CbC report.
Specific questions upon which comments are sought are set out in each chapter.
The OECD said the public consultation document is based upon the mandate set out in the BEPS Action 13 report, and focuses on issues concerning the use of CbC reports by tax administrations for the purposes of a high level transfer pricing risk assessment, the assessment of other BEPS-related risks, and economic and statistical analysis.
On January 31, 2020, the Inclusive Framework also released a Statement on the Two-Pillar Approach to Address the Tax Challenges Arising From the Digitalisation of the Economy. Work on that approach may include consideration as to whether elements of the framework or principles underpinning CbC reporting may be used to support implementation and operation of Pillar 1 and/or Pillar 2, and input from stakeholders may be sought as part of that process, the OECD said. However, these matters are not considered in the public consultation document released on February 6.
Comments on the consultation should be submitted by March 6. All comments received will be made publicly available.