Tax & Accounting Blog

Part 2: Multiple Country-by-Country Reports & Multiple XML Schema

BEPS, Blog, ONESOURCE June 24, 2016

On March 22, 2016, the OECD published its standardized electronic format for the exchange of Country-by-Country (“CbC”) Reports between Competent Authorities, including the CbC extensible markup language (“XML”) schema and related User Guide. Both documents were developed to assist the speedy and consistent implementation of CbC Reporting with a view to accommodating the electronic preparation, filing and exchange of CbC Reports.

The complexities of producing CbC reports in the OECD XML schema is not one to be taken lightly. This, coupled with the other complexities of BEPS compliance, should further discourage MNEs from self-preparation of CbC reports. ONESOURCE can help.

This is Part 2 of a Series on CbC Reports and what you need to know. See Part 1.

To add to the mix, it is most likely that MNEs will end up filing directly in more than one jurisdiction. For example, since the U.S. has not yet finalized its CbC reporting regulations (anticipated at the end of this month), a U.S. MNE with a fiscal year beginning 1 January 2016 will need to do one of two things: either file CbC reports directly with each jurisdiction in which it has a constituent entity (if the respective jurisdiction has already implemented CbC reporting requirements), or the MNE will need to appoint a surrogate parent to file on behalf of the group. Even in the latter case, it is unlikely that the surrogate jurisdiction selected would have entered into the necessary information exchange agreements to automatically exchange CbC reports with all the other jurisdictions with CbC requirements, thereby leaving a very high probability that an MNE will end up having to file in more than one jurisdiction.

In addition to the complexity of having to comply with local country requirements like currency conversion rules, filing in multiple jurisdictions will also mean complying with local country reporting formats with no guarantee that all jurisdictions will require CbC reports to be submitted in the exact XML schema recommended by the OECD.

The U.S. for example, has indicated in its proposed regulation that a specific form (XXX) will need to be filled out.
A simple example would be a U.S. HQ MNE with constituent entities in Australia and Japan. The U.S. has already indicated in its proposed CbC regulations that a specific form (XXX) will need to be used for the filing, and Australia and Japan have indicated that they will adopt the OECD XML schema, but may make certain adjustments for local system and reporting requirements. So, if the U.S. MNEs fiscal year begins January 1, 2016, its constituent entities in Australia and Japan would need to file CbC reports locally, due to lack of requirements in the U.S. for that year, and those reports would need to be generated to meet the respective jurisdiction’s report formatting and data requirements (assuming no surrogate filing or automatic exchange). Now for the following fiscal year, for which the U.S., will presumably have CbC requirements in place, the MNE may still need to file locally if the U.S. has still not entered into the required CbC exchange agreements. In this case, three different reports would need to be generated to meet the respective jurisdiction’s requirements. In addition the MNE may not be able to use the same exact XML schema prescribed by Japan and Australia in 2016 because both jurisdictions may have made modifications to their schema for the 2017 CbC filings.

Stay tuned for our continued series to be published over the next several weeks that will address the summary below.


    • Preparing CbC Reports in the XML Schema proposed by the OECD is complex and requires a fair amount of computer programming
    • It is very likely that jurisdictions will adopt the same schema for MNEs to submit their CbC reports but there will be variations to capture country specific requirements
    • It is most likely that MNEs will end up having to file CbC reports directly to more than one jurisdiction which will also mean maintaining multiple XML reporting formats
    • It is very likely that jurisdictions will modify their CbC XML Schemas year over year
    • There is also a notification requirement and this must be satisfied by filing directly with each jurisdiction unlike the CbC report where multiple jurisdictions can receive the CbC report via automatic exchange
    • In addition both the CbC report and the notification will have to be e filed meaning some form of machine to machine communication with the filing tax jurisdictions
    • The OECD XML schema is asking for additional information compared to what is in the current OECD table 1, 2 and 3 templates including legal entity type which could be an additional data point that can be used by tax authorities to determine if roll up and reclass logic is correctly applied
    • The OECD XML schema should also be seen as an opportunity to add explanatory narratives like the use of NOLs and other incentives to explain a low taxes paid and taxes accrued as well as to notify the tax authority as to which jurisdictions should be entitled to receive the CbC report via automatic exchange and which jurisdictions should not since the rules that determine this is complex and constantly evolving as countries continuously implement CbC rules often with retroactive effective dates.