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BEPS: Implementation package of country by country report.

In the last few months the OECD has published a package inside of BEPS (Base Erosion and Profit Shifting) projects, which looks forward to an easier implementation of country by country reporting for different members.

This package seeks to implement new standards for transfer pricing reports. These will be more efficient so that the tax authorities can understand the way in which multinational companies structure their intercompany transactions while focusing on the confidentiality of information .

The country by country operation report will require multinational companies to disclose aggregate information on the apportionment of their income and annually paid taxes in each jurisdiction where they have operations in addition to some information about the economic activity center in the multinational group.

The deployment package carries a legislative model which requires the multinational group to deliver a country by country report to the tax authorities of the country in which the group established . The package also includes three model agreements for the authorities which are intended to facilitate the exchange of information regarding this report. These agreements are based on a multilateral convention on administrative assistance in tax matters, bilateral tax treaties, and information exchange agreements

The package was approved by the OECD countries participating in the BEPS projects at , meeting held on May 27 and 28 2015.

Model legislation in relation to the country by country report

The legislative model is divided into eight articles, which are:

1.      Definitions
2.      Obligation to report
3.      Notifications
4.      Description of the country by country report
5.      Date of submission of report
6.      Use and confidentiality of the information reported
7.      Sanctions
8.      The effective date of entry of the legislation

It is important to mention that the legislation model limits the use of the provided information for the tax authority, since much of the information required is sensitive.

It is clear that the global trend is towards for a stricter regulation on operations that the tax authorities consider vulnerable. While the document is just a model,  we should take into account that a large part of tax law in Mexico is influenced by international agreements. It won’t be a surprise that in the future legislative reform models will be implemented country by country

For further information the document can be downloaded from the following web address:

http://www.oecd.org/ctp/transfer-pricing/beps-action-13-country-by-country-reporting-implementation-package.pdf

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