Country‐by‐Country Reporting: The New OECD Guidelines and IRS Final Regulations

AuthorRoger Y. W. Tang,Thomas D. Schultz
Published date01 May 2017
Date01 May 2017
© 2017 Wiley Periodicals, Inc.
Published online in Wiley Online Library (
DOI 10.1002/jcaf.22271
Country-by-Country Reporting:
The New OECD Guidelines and
IRS Final Regulations
Roger Y. W. Tang and Thomas D. Schultz
The Organisation
for Economic
and Development
(OECD) and the
Group of Twenty
(G20) countries
established the Base
Erosion and Profit
Shifting (BEPS)
project to address
concerns regarding
the ability of multi-
national enterprises
(MNEs) to engage
in tax avoidance by
exploiting gaps in
international tax
rules. When MNEs
structure advanta-
geous transfer pricing arrange-
ments and other strategies to
artificially shift the recognition
of profits to relatively low-tax
or no-tax jurisdictions, the
result is a misalignment of the
incidence of taxation and the
true source of value creation.
The BEPS project helps global
tax authorities by providing an
inclusive framework and the
tools necessary for measuring
and taxing profits in the loca-
tions where economic activities
After its initial BEPS
report was released in 2013,
the OECD and G20 countries
adopted a 15-point action plan
to guide future international tax
administration efforts (OECD,
2013a, 2013b). Specifically,
Action 13 provided
revised standards
for transfer pric-
ing documentation
and a template for
(CbC) reporting
of revenues, prof-
its, taxes paid, and
other measures of
key economic activi-
ties (OECD, 2014).
Since delivering
this guidance, all
OECD members
and G20 countries
have worked with
developing countries,
the European Com-
mission, and many
other international stakehold-
ers (including the International
Monetary Fund, the World
Bank, and the United Nations)
to develop a 2015 final report
for each of the 15 action plans
(OECD, 2015a).
The final report on Action
13 released in October 2015
contains revised standards
for MNE transfer pricing
Because transfer pricing strategies can artifi-
cially shift the recognition of business profits to
relatively low-tax or no-tax jurisdictions, global
tax authorities find it challenging to fairly and
consistently measure the economic value created
by multinational enterprises in a given country.
Action 13 of the OECD/G20 Base Erosion and Profit
Shifting Project provides an inclusive framework to
address these challenges including a template for
annual country-by-country reporting of revenues,
profits, and taxes paid. In the United States, final
regulations have established the reporting require-
ments for U.S. multinational enterprise groups for
taxable years beginning on or after June 30,
2016, when annual revenues exceed $850 million.
© 2017 Wiley Periodicals, Inc.
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