OECD issues standardised e-format for info exchange on BEPS

With India and other countries stepping up vigil against tax evasion, Paris-based OECD has prepared a standardised electronic format for information exchange to help tax authorities have a better understanding about the way multinational firms structure their operations.
The move is part of larger efforts, agreed upon by G-20 countries, including India, to clamp down on activities that leads to Base Erosion and Profit Shifting (BEPS).
The Organisation for Economic Cooperation and Development (OECD) today released its standardised electronic format for the exchange of Country-by-Country (CbC) reports between jurisdictions -- CbC XML Schema - along with the related user guide.

"CbC reports, to be electronically transmitted between competent authorities in accordance with the CbC XML Schema, will assist tax administrations in obtaining a complete understanding of the way in which Multinational Enterprises (MNEs) structure their operations," it said in a release.
Through this format, tax authorities would be annually provided key information on 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.

CbC XML Schema is part of efforts to ensure the swift and efficient implementation of the BEPS measures, which was endorsed by the G-20 leaders as part of the final BEPS package in November 2015.

"First exchanges of CbC reports will start in 2018, with information on the year 2016. The country-by-country reporting template does not apply to groups with annual consolidated revenue in the immediately preceding fiscal year of less than 750 million euros," it noted.
The OECD/G20 BEPS Project seeks to ensure that profits are reported where economic activities are carried out and value created.
The overall aim is to close the gaps in existing international rules that allow corporate profits to disappear or be artificially shifted to low or no tax environments, where companies have little or no economic activity.

Information for the CbC report would be collected by the country of residence of the reporting entity for MNE group. Subsequently, the same would be exchanged under the relevant international exchange of information agreement, in particular the Multilateral Competent Authority Agreement on the Exchange of CbC reports in the format of the CbC XML Schema.
OECD said the CbC XML Schema has been primarily designed to be used for the automatic exchange of CbC reports between competent authorities.
In recent times, India and many other countries have strengthened their cooperation on tax matters as part of ways to prevent illicit fund flows.