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NEWS

COUNTRIES TO AUTOMATICALLY EXCHANGE TAX INFORMATION - ARE YOU PREPARED?

6 May 2017

The OECD member countries are formalising the automatic exchange of Country-by-Country (CbC) reports under the CbC MCAA with nominated partner countries. 

 

Automatic exchanges of CbC reporting

 

Tax authorities of various countries have committed to more than 700 automatic exchange relationships, including those between EU member states under EU Council Directive 2016/881/EU, for exchanging CbC reports as of 2018.

 

CbC reports filed by a multinational group in its parent jurisdiction will be automatically exchanged with countries where the multinational operates. We have compiled some key exchange relationships established to date.

 

SELECTED EXCHANGE RELATIONSHIPS AS OF MAY 4, 2017

 

Australia

Belgium, Bermuda, Denmark, Ireland, Mexico, Norway, Netherlands, Spain, United Kingdom, Austria, Brazil, Canada, Estonia, Finland, France, Germany, Guernsey, Iceland, Isle of Man, Italy, Jersey, Liechtenstein, Mauritius, New Zealand, Norway, Slovenia, South Africa, Uruguay, Malaysia

Austria

28 EU member states, Australia, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, South Africa, Uruguay, Malaysia

Belgium

28 EU member states, Australia, Mexico, Norway, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, Mauritius, New Zealand, South Africa, Uruguay, Malaysia

Denmark

28 EU member states, Australia, Mexico, Norway, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, Mauritius, New Zealand, South Africa, Uruguay

Finland

28 EU member states, Australia, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, South Africa, Uruguay, Malaysia

France

28 EU member states, Australia, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, South Africa, Uruguay, Malaysia

Germany

28 EU member states, Australia, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, South Africa, Uruguay, Malaysia

Italy

28 EU member states, Australia, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, South Africa, Uruguay, Malaysia

Netherlands

28 EU member states, Australia, Mexico, Norway, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, Mauritius, New Zealand, South Africa, Uruguay, Malaysia

Norway

Australia, Belgium, Denmark, Iceland, Ireland, Mexico, Netherlands, Slovenia, South Africa, Spain, United Kingdom, Austria, Brazil, Canada, Estonia, Finland, France, Germany, Guernsey, Iceland, Isle of Man, Italy, Jersey, Liechtenstein, Mauritius, New Zealand, Uruguay, Malaysia

Spain

28 EU member states, Australia, Mexico, Norway, Brazil, Canada, Guernsey, Iceland, Isle of Man, Jersey, Liechtenstein, New Zealand, South Africa, Uruguay, Malaysia

United Kingdom

27 EU member states (excluding Gibraltar), Australia, Mexico, Norway, Brazil, Canada, Iceland, Liechtenstein, Mauritius, New Zealand, South Africa, Uruguay, Malaysia


 

Practical Considerations For Your Business

 

Multinationals can expect tax authorities in all countries where they operate to have access to these CbC reports. The availability of this information to tax authorities will add another layer of complexity to compliance risks across global groups such as reviews of local tax filings in the recipient countries.

 

These reviews if not addressed consistently and accurately could lead to extensive discussions and disputes that have to be managed and resolved.

 

While most internal functions of multinationals will be focusing on the compliance aspect of enabling CbC Reporting, it is equally important to reassess the global outbound tax strategy in the lights of increased scrutiny, and be ready to defend the scrutiny with back-up documentation, processes, internal governance guidelines.

 

To increase the chances of a sound defensible tax position going forward, companies can start with reviewing the following aspects:

  • Domestic Anti-Avoidance Rules (such as the Australian MAAL and UK's Diverted Profits Tax) which may trigger taxation in the local jurisdictions

  • Local functional profiles to ensure that they are in line with the associated internal policies and all inconsistencies investigated and

  • Considering whether the local transfer pricing policies are in line with the global view and where possible to obtain bilateral advanced pricing agreements (APA) for certainty in significant tax positions.

If you would like to know more about the implications of these developments for your business, please contact us.

 

 

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