On 27 January 2016, 31 countries signed the Multilateral Competent Authority Agreement (MCAA), which will bring greater sharing of information in international tax matters. The MCCA provides for the automatic exchange of Country-by-Country reports, enabling tax administrations to obtain a complete understanding of how multinational enterprise operations are structured across the value chain, while ensuring the confidentiality of such information.
‘Country-by-Country reporting will have an immediate impact in boosting international co-operation on tax issues, by enhancing the transparency of multinational enterprises’ operations,’ said OECD Secretary-General Angel Gurría. ‘Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on the key indicators of multinational businesses. This is a much-needed tool towards the goal of ensuring that companies pay their fair share of tax, and would not have been possible without the BEPS Project.’This agreement, which covers BEPS Action 13 (Transfer Pricing Documentation & Country-by-Country Reporting), requires large companies operating in multiple jurisdictions to “report to their country of residence specified information regarding each jurisdiction in which the group operates,” including “revenues, profits, income tax paid, stated capital, accumulated earnings, number of employees, and tangible assets.”
First exchanges will start in 2017-2018 on 2016 information, depending on local implementation of CbC reporting requirements. In case information fails to be exchanged, the Action 13 report provides for alternative filing so that the playing field is levelled – although again this will depend on how the OECD recommendations are implemented in each territory.