CbCR: OECD clarifications on its implementation

Following on from the BEPS and in particular Action 13 reports, the OECD has recently published three important documents aiming at providing greater legal certainty for tax administrations and multinational enterprise groups in the practical implementation of the declaration on a country-by-country basis.

While the OECD has so far limited itself to commenting on issues of interpretation of the standard for consistent implementation, the last three publications provide informative information in anticipation of the Administration’s analysis of the data provided on the eve of the first CbCR submission.

Instructions on the Appropriate Use of Information Contained in the CbCR (September 6, 2017)

Insofar as the obtaining of country-by-country declarations (by exchange between administrations) is conditional upon the respect by each State of a normative framework, the OECD points out the appropriate use of CbCR data, which must be limited to:

  • A general assessment of transfer pricing risks
  • An assessment of other risks of erosion of the tax base and transfer of profits
  • Economic and statistical analysis, if necessary

To this end, these instructions define a checklist of approaches to ensure appropriate use and also specify the consequences for countries of non-compliance with appropriate use.

Two practical manuals on tax risk assessment and implementation (September 29, 2017)

At the Oslo Forum on Tax Administration, the OECD also published two practical handbooks for tax administrations to guide them towards an optimal and relevant use of CbCR data. These manuals detail in particular:

  • How to integrate CbCR information into the risk assessment of a tax administration
  • Which data sources should be used by jurisdictions in conjunction with the CbCR
  • What are the relevant tax risk indicators and ratios to be used?