TEI comments on proposed country-by-country reporting regulations.

• Author: Pollard, Mark
• Position: Tax Executives Institute

On March 21, 2016, TEI submitted comments to the IRS regarding proposed regulations (REG-109822-15) that would require certain U.S. headquartered multinational enterprises to report financial and tax information to the IRS on a country-by-country basis. The Institute's comments focused on the need for the final regulations to be consistent with the final report on Action 13 of the OECD's base erosion and profit shifting (BEPS) project to minimize the administrative burden on businesses and permit flexibility in information reporting. The comments were prepared under the aegis of TEI's U.S. International Tax Committee, whose chair is Mark Pollard. Benjamin Shreck, TEI Tax Counsel, coordinated the development of the Institute's comments.

The Internal Revenue Service (the Service) and Treasury Department (Treasury) released proposed regulations on December 23, 2015, requiring certain U.S. persons to report selected information about their operations and taxes paid on a country-by-country basis. (1) The Proposed Regulations generally reflect the recommendations regarding country-by-country reporting in the final report under Action 13 of the Organisation for Economic Cooperation Development's (OECD) base erosion and profit shifting (BEPS) project. The final report under BEPS Action 13 provides guidance for countries participating in the BEPS project to implement improved transfer pricing documentation requirements, including country-by-country (CbC) reporting, with the goal of improving tax administration and risk assessment in transfer pricing matters.

The Service and Treasury requested comments on the Proposed Regulations on or before March 22, 2016. On behalf of Tax Executives Institute, Inc. (TEI), I am pleased to respond to this request for comments.

Tax Executives Institute

TEI is the preeminent association of in-house tax professionals worldwide. Our approximately 7,000 members represent more than 2,800 of the leading corporations in North and South America, Europe, and Asia. TEI represents a cross-section of the business community and is dedicated to developing and effectively implementing sound tax policy, promoting the uniform and equitable enforcement of the tax laws, and reducing the cost and burden of tax administration and compliance to the benefit of taxpayers and governments alike. TEI is firmly committed to maintaining a tax system that works--one that is administrate and with which taxpayers can comply in a cost-efficient and predictable manner.

TEI, as a professional association of in-house tax executives, offers a unique perspective. Members of TEI manage the tax affairs of their companies and must contend daily with provisions of the tax law impacting business enterprises, including information reporting and documentation requirements such as those set forth in the Proposed Regulations. Our members work for companies in a wide variety of industries and their collective perspectives are broad-based and not tied to any particular special interest group. The diversity, background, and professional training of TEI's members place the organization in a uniquely qualified position from which to comment on the Proposed Regulations.

General Comments

TEI commends the Service and Treasury for the overall approach of the Proposed Regulations in generally tracking the final report issued under BEPS Action 13. The flexibility provided to multinational enterprises (MNEs) to use the financial information best suited to their operations to populate the CbC reporting template is particularly welcome. While the Proposed Regulations generally follow the OECD guidance for CbC reporting, there are significant differences between the Proposed Regulations and the final OECD report on BEPS Action 13. (2) This is regrettable because one of the objectives of the BEPS...