The Internal Revenue Service has recently announced the launch of country-by-country (CbC) reporting pages on irs.gov which will provide background information on CbC reporting, frequently asked questions and other helpful resources, including a list of jurisdictions that have concluded competent authority arrangements with the United States.
Country-by-country reporting is part of Action 13 of the Organization for Economic Cooperation and Development's base erosion and profit shifting project, which is intended to enhance transparency for tax administrations by providing them with information to conduct high level transfer pricing risk assessments. The CbC report provides summary data by jurisdiction including revenue, income, taxes and indicators of economic activity.
As part of the United States' CbC reporting, US parent entities of multinational enterprise (MNE) groups with $850 million or more of revenue in the relevant preceding annual reporting period will file Form 8975 (i.e. the CbC report) and Schedule A with their annual income tax return. The CbC reporting web pages provide additional helpful information and links to guidance and resources for US MNE groups on CbC reporting, including the final regulations, Rev. Proc. 2017-23 on filing for early reporting periods, the forms and instructions, as well as the choice to subscribe to the CbC reporting newsletter. Also, information for the US parent entities that files its return electronically must file the Form 8975 through the IRS Modernized e-File (MeF) system in Extensible Markup Language (XML) format, not as a binary attachment (such as a PDF file).
The US competent authority is looking to enter into bilateral competent authority arrangements (CAAs) for the automatic exchange of CbC reporting information with competent authorities in Inclusive Framework jurisdictions with other countries with whom we share tax treaties or information exchange agreements. This will allow for the automatic exchange of information provided the United States determines that the jurisdiction has in place appropriate safeguards with respect to confidentiality and use of the information exchanged.
The CbC reporting website provides a jurisdiction status table showing the CAAs that have been signed for CbC reporting. Where jurisdictions agree that the text of a CAA can be made public, links to the text are included in the table. For more information contact your local UHY LLP professional.
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