On January 19, 2017, the U.S. Internal Revenue Service (IRS) released Revenue Procedure 2017-23, which describes the process for filing Form 8975, Country-by-Country Report, and accompanying Schedule A, Tax Jurisdiction and Constituent Entity Information (collectively, Form 8975), by ultimate parent entities of U.S. multinational enterprise (MNE) groups for reporting periods beginning on or after January 1, 2016, but before the applicability date of §1.6038-4. See BEPS Action 13.
On June 30, 2016, the U.S. Treasury Department and IRS published in the Federal Register final regulations (T.D. 9773) (country-by-country (CbC) reporting regulations) that require certain U.S. business entities that are the ultimate parent entity of a U.S. MNE group to file Form 8975 annually with the IRS. Form 8975 requires the ultimate parent entity of a U.S. MNE group to report information, on a country-by-country basis, related to the group’s income and taxes paid, together with certain indicators of the location of the group’s economic activity. The CbC reporting regulations apply to reporting periods of ultimate parent entities of U.S. MNE groups that begin on or after the first day of the first taxable year of the ultimate parent entity that begins on or after June 30, 2016.
Some jurisdictions have adopted CbC reporting requirements for annual accounting periods beginning on or after January 1, 2016, which would require a constituent entity resident in the jurisdiction to report CbC information if the constituent entity is part of an MNE group with an ultimate parent entity resident in a jurisdiction that does not have a CbC reporting requirement for the same annual accounting period.
Beginning on September 1, 2017, Form 8975 may be filed for an early reporting period with the income tax return or other return as provided in the Instructions to Form 8975 for the taxable year of the ultimate parent entity of the U.S. MNE group with or within which the early reporting period ends. In order to file Form 8975 for an early reporting period, an ultimate parent entity that files (or has filed) an income tax return for a taxable year that includes an early reporting period without a Form 8975 attached must follow the procedures for filing an amended income tax return and attach Form 8975 to the amended return within twelve months of the close of the taxable year that includes the early reporting period. Filing an amended income tax return solely to attach Form 8975 in accordance with this revenue procedure will have no effect on the statute of limitations for the income tax return.
In order to ensure timely automatic exchange of the information on Form 8975 for an early reporting period, ultimate parent entities are encouraged to file their returns and Form 8975 electronically.
Revenue Procedure 2017-23 will be in IRB 2017-07, dated February 13, 2017.