Country-by-Country Reporting

Country-by-country reporting is a relatively new statutory requirement introduced for multinational enterprises with a combined revenue of greater than €750 million. Country-by-country reporting is part of the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan 13. The basic requirements include providing an annual country-by-country report and return to include a breakdown of the key elements of the financial statements by jurisdiction. The ultimate aim is to provide local tax authorities with increased visibility and in the UK to assist HMRC in successfully assessing international tax avoidance risks by communicating with other relevant tax jurisdictions.

Country-by-country reports for qualifying entities will need to be filed for all accounting periods starting on or after 1st January 2016. The country-by-country reporting should be filed within 12 months of the relevant year end.

The entity is required to disclose for each tax jurisdiction in which they do business;

  • The amount of revenue, profit before tax and in addition tax paid and accrued
  • Total employment, capital, retained earnings and tangible assets

Country-by-country reports are primarily required to be filed where the parent company is headquartered. However, where the headquarter country has not implemented country-by-country reporting, the multinational enterprise should appoint a surrogate parent entity who will take care of the filing process.

In terms of UK entities who are subsidiaries of non-UK parented multinational groups, such entities must notify HMRC each year of which group entity is to file the country-by-country report. In addition, the UK subsidiary should provide details of the names and unique taxpayer references for all UK entities within the group.

The information in this article is believed to be factually correct at the time of writing and publication, but is not intended to constitute advice.  No liability is accepted for any loss howsoever arising as a result of the contents of this article. Specific advice should be sought before entering into, or refraining from entering into any transaction