You may have noticed in the news recently that many large multinationals have been the subject of some rather intense media and public scrutiny regarding the amount of tax they pay in certain countries. As media pressure and public anger has escalated, governments and regulators have been compelled to take action to improve the visibility of where companies make their profits and where they pay their taxes to help ensure that they pay a fair share to the coffers of the national governments.
It had become obvious to governments that the underlying issues could not be addressed by unilateral regulation and instead need a cohesive joined up approach to tackle tax base erosion and profit shifting through transfer pricing arrangements between multinational subsidiaries. The OECD in conjunction with the G20 countries devised an action plan which includes the need for greater levels of disclosure from multinational enterprises (MNEs) in relation to the countries where their economic activities occur and amounts of tax they pay in each jurisdiction. This has resulted in the creation of the Country by Country (CbC) reporting standards by the OECD that are being implemented through the local tax governing bodies of all OECD members.
The OECD CbC regime requires the following reporting on a country by country basis;
Aggregate country wide information relating to the global allocation of
* Taxes paid;
* and; other indicators of economic activity (stated capital, accumulated earnings, tangible assets, no of employees)