BEPS Action 13: Local requirements on Transfer Pricing Documentation and Country by Country Report

Businesses operating across the globe should be aware of and may need to comply with additional local (reporting) requirements, as a result of the OECD's Base Erosion and Profit Shifting (BEPS) Action 13, related to Transfer Pricing Documentation and Country by Country Report.

BEPS Action 13

According to the OECD model legislation, multinational companies that are resident in two or more countries with consolidated group annual turnover of at least EUR 750 million in a financial year, are required to prepare and submit a Country-by-Country report (CbCr) to local authorities. CbCr is an annual recurring obligation. Depending on the implementation in domestic legislation, there may be also a legal requirement for companies that are part of a multinational group to notify the relevant local authorities on the identity, tax residence and tax ID number of the company within a multinational group that will be responsible for the submission of the CbCr. This so called notification requirement is also an annual recurring obligation.

Below is an overview of the CbCr requirements and CbC notification deadlines for the four countries have deadlines set for October - Italy (16th) (please note this deadline passed), Cyprus (20th*), Poland (31st) and Portugal (31st) – as well as India, who has set a deadline of November 30.

Italy (please note this deadline passed)

  • Deadline details: The constituent entity obliged or designated to comply with the CbC reporting obligations, must inform the Italian tax authorities of this within the deadline for filing its annual corporate tax return (i.e. within ninth months of its year-end). Within the same deadline, each Italian entity of Multinational Enterprise (MNE) Group must notify the Italian tax authorities of the entity designated to file the CbC Report.
  • Reporting details:
    • Revenue: applies to MNEs with annual consolidated group revenue equal to or exceeding €750 million in the previous year.
    • Format: adoption of OECD's XML Schema standardized electronic format is anticipated.
    • Penalties for non-compliance: will range between €10,000 and €50,000.

Cyprus

  • Deadline details: Any constituent company of an MNE Group that is a tax resident of Cyprus, shall notify the Cyprus Tax Authorities whether it is the ultimate parent entity or the surrogate parent entity, no later than the last day of the reporting fiscal year of such MNE group.
  • Reporting details:
    • Revenue: applies to MNEs with annual consolidated group revenue equal to or exceeding €750 million in the previous year.
    • Language: CbC report must be filed in English.
    • Format: OECD's XML Schema standardized electronic format.
    • Penalties for non-compliance: Penalties have not been determined yet.

Poland

  • Deadline details: For the reporting period beginning after 31 December 2015 but no later than on 31 December 2016, the notification is to be filed within 10 months since the end of that period. For the following periods, the notification is to be filed no later than on the last day of the reporting period.
  • Reporting details:
    • Revenue: applies to MNEs headquartered in Poland with annual consolidated group revenue equal to or exceeding €750 million in the previous year.
    • Language: CbC report must be filed in Polish.
    • Format: adoption of OECD's XML Schema standardized electronic format is anticipated.
    • Penalties for non-compliance: up to PLN 1 million as introduced under the Act on Exchange of Tax Information. Other penalties might apply.

Portugal

  • Deadline details: Any reporting entity of an MNE group that is tax resident in Portugal must notify the Portuguese Tax Administration of its identity and tax residence before the end of the fiscal year for which the information will be prepared. This applies for fiscal years beginning on or after 1 January 2016.
  • Reporting details:
    • Revenue: applies to MNEs with annual consolidated group revenue equal to or exceeding €750 million in the previous year.
    • Language: must be filed in Portuguese.
    • Format: adoption of the OECD's XML Schema standardized electronic format is anticipated.
    • Penalties for non-compliance: up to €10,000.

India

  • Deadline details: The Indian regulations require the constituent entity in India to notify the income-tax authorities of the details of the parent entity and the country in which it is tax resident. The CbC report should be filed with the income return within eight months following the last day of the fiscal year end.
  • Reporting details:
    • Revenue: applies to MNEs with annual consolidated group revenue equal to or exceeding €750 million in the previous year.
    • Language: CbC report must be filed in English.
    • Format: pending to be determined. India has not adopted the OECD's XML Schema standardized electronic format yet.
    • Penalties for non-compliance: up to IN R500,000.

Get expert help

TMF Group experts in over 80 countries keep a close eye on local and global roll outs and reporting requirements of BEPS initiative. Our local teams can submit the Country-by-Country notification on your behalf, please speak to our experts to learn how we can help.

 

 

* Deadline for notification on FY 2016. Notification deadline on FY 2017 is 31 December 2017.

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