On 30 January 2014, the Organisation for Economic Cooperation and Development (OECD) released a discussion draft on transfer pricing documentation and country by country reporting (CBCR) which included a template for country by country reporting of income, taxes, and economic activity (CBCR template). The purpose of the CBCR template is to provide tax authorities with the information necessary to conduct a high-level risk assessment of multinational entities (MNEs). During its second Base Erosion and Profit Shifting (BEPS) webcast on 2 April 2014, the OECD announced their tentative decision to amend certain aspects of the template that was exposed for comment to reflect the recommendations received from businesses and other commentators.
This publication focuses on some of the challenges MNEs may face in compiling information that would be required to be disclosed in the CBCR template, including the following:
- availability of resources
- potentially significant investments in information systems and processes to enable extraction of the relevant data, and
- availability of an appropriate risk management framework to allow effective reconciliation of data reported in the template.