"As part of continuing efforts to boost transparency by multinational enterprises (MNEs), Canada, Iceland, India, Israel, New Zealand and the People's Republic of China signed today the Multilateral Competent Authority agreement for the automatic exchange of Country-by-Country reports, bringing the total number of signatories to 39 countries," an OECD release said.
The signing ceremony took place here.
Other countries which have already signed the pact include Australia, France, Germany, Japan, Liechtenstein, Malaysia, Italy and the UK.
"It will help ensure that tax administrations obtain a complete understanding of how MNEs structure their operations, while also ensuring that the confidentiality of such information is safeguarded," it said.
In October last year, the Organization for Economic Cooperation and Development (OECD) issued final tax policy recommendations stemming from its Base Erosion and Profit Shifting (BEPS) project.
The original concept of the BEPS project was to target limited, overly aggressive tax planning that resulted in inappropriate tax avoidance, particularly the elimination of 'cash boxes' - shell companies with few employees or economic activities and subject to little or no taxation.
"Country-by-country reporting will require MNEs to provide aggregate information annually, in each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group.
"It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in," the release said.
G20 Leaders endorsed the wide-ranging BEPS package in November 2015, marking an historic opportunity for improving the effectiveness of the international tax system.
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