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Hong Kong and Latvia Agree to Exchange CbC Reports

Jessica Silbering-Meyer  

Jessica Silbering-Meyer  

On May 27, 2019, Hong Long and Latvia signed an agreement to automatically exchange country-by-country (CbC) reports.

Hong Kong and Latvia will annually exchange on an automatic basis the CbC reports received from each reporting entity that is tax resident in its jurisdiction provided that one or more constituent entities of the reporting entity’s MNE group are tax resident in the other Competent Authority’s jurisdiction or are subject to tax with respect to a business carried out through a permanent establishment (PE) in the other Competent Authority’s jurisdiction.

CbC reports should be exchanged with respect to MNE group fiscal years beginning between January 1, 2018 and December 31, 2018. CbC reports should be exchanged as soon as possible, and no later than 15 months after the last day of the MNE group’s fiscal year to which the CbC report relates. The Competent Authorities will automatically exchange CbC reports through a common schema in Extensible Markup Language.

Information received in the CbC reports will be used to assess high-level transfer pricing, base erosion and profit shifting related risks, and economic and statistical analysis. The information will not be used as a substitute for a detailed transfer pricing analysis of individual transactions and prices based on a full functional and comparability analysis.

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