Tax & Accounting Blog

OECD Releases Details of Country-by-Country Reporting Implementation and Exchange Relationships

BEPS, Blog May 9, 2017

On May 4, 2017, the OECD issued a press release on the implementation of country-by-country (CbC) reporting and corresponding automatic exchange agreements. Currently, 57 jurisdictions have signed the CbC Multilateral Competent Authority Agreement (CbC MCAA), which includes conditions to exchange CbC reports under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. CbC reports will be exchanged automatically between EU member states under Directive 2016/881.

Under BEPS Action 13, CbC reporting should apply to reporting fiscal years of MNE groups beginning on or after January 1, 2016, but some countries have deviated from this (e.g., Switzerland). The first automatic exchanges of CbC reports should occur no later than June 2018. Over 700 automatic exchange relationships have been established between jurisdictions with respect to the exchange of CbC reports by 2018, according to the OECD’s May 4th press release. Other jurisdictions are working on bilateral CAAs, which will allow them to exchange CbC reports under a double tax convention (DTC) or tax information exchange agreement (TIEA). The May 4th OECD release does not list the U.S. as having any CbC reporting automatic exchange relationship, but Canada is listed for most countries.

On April 6, 2017, the U.S. Internal Revenue Service (IRS) published two model CAAs for the exchange of CbC reports; one based on a DTC and the other based on a TIEA. On April 28, 2017, IRS LB&I Commissioner Douglas O'Donnell said that the IRS has signed CAAs for the exchange of CbC reports with the Netherlands, and one other yet to be named country. O'Donnell added that the IRS will update its CbC Reporting Guidance webpage to include any CAAs it signs.

Action 13 says that the ultimate parent entity of an MNE group should file a CbC report with the tax authority in its residence jurisdiction within 12 months after the end of the reporting fiscal period. Currently, approximately 45 jurisdictions have implemented the ultimate parent filing requirement, according to the OECD CbC reporting portal. Ten countries have informed the OECD that they will permit voluntary parent surrogate filing by the resident ultimate parent of the group, and approximately 45 countries will permit surrogate filing by constituent entities (not the ultimate parent), also known as local filing.

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