Worldwide: Country-By-Country Reporting And Global Master Files: OECD BEPS Action 13 - Global Tax Update

Last Updated: September 17 2015
Article by Blaise L. Marin-Curtoud

The OECD's recent recommendations1 with respect to transfer pricing documentation and country-by-country reporting may have the most significant impact on multinational enterprises ("MNEs") of all of the OECD's BEPS proposals. The adoption of these recommendations, without consensus on effective dispute resolution, is likely to alter the transfer pricing practices of many MNEs and may even impact their business models in the face of increased transfer pricing and nexus (permanent establishment) disputes.

What Must Be Reported?

The OECD recommends a three-tiered standardised reporting structure for MNEs with at least EUR 750 million of annual revenues, consisting of an annual country-by-country report ("CbC Report"), along with a global master file ("Global Master File") and local transfer pricing files ("Local Files"). The new reporting requirements would be effective with respect to 2016 and the first reports would thus have to be filed in 2017.

CbC Report. The OECD has published a model template for the CbC Report, which consists of three tables. The first table is an overview per jurisdiction (i.e., not per entity) of (i) the revenues, specifying both related-party and unrelated-party revenues, including service, royalty and interest income, (ii) the profits before tax, (iii) the income tax paid on a cash basis, (iv) the income tax accrued for the current year, (v) the stated capital, (vi) the accumulated earnings, (vii) the number of FTEs and (viii) the tangible assets (other than cash and cash equivalents). The second table is a list of constituent entities of the MNE per tax jurisdiction, including taxable branches and permanent establishments, and a designation of each such entity's main business activities, by ticking specific boxes. The third table allows, but does not require, the MNE to provide more information with respect to the compulsory information of tables 1 and 2.

Global Master File. The Global Master File is intended to be a "blueprint" of the MNE, or if justified, its separate business lines. It should include (i) an organisational structure chart, (ii) a description of the business, including the capabilities of the principal locations of the MNE and a brief functional analysis describing the principal contributions to value creation by individual entities within the group, (iii) an overview of the main intangibles of the MNE and of the intercompany arrangements relating to those intangibles, (iv) an overview of the financing structure of the MNE and its internal financing arrangements, (v) the consolidated financial statements of the MNE, even if the MNE is not obliged to prepare such statements, but does so only for internal management purposes and (vi) a list of existing tax rulings and advance pricing agreements "relating to the allocation of income among countries".

Where to File and Exchange of Information

The OECD recommends that the Global Master File and Local File be submitted with the local tax administration of all relevant jurisdictions and that the CbC Report be filed in the jurisdiction of the ultimate parent company or, if such jurisdiction fails to exchange the CbC Report with foreign tax administrations on undue grounds, a secondary jurisdiction. The CbC Report should then be shared automatically by the tax administration of the filing jurisdiction with foreign tax administrations based on competent authority agreements included in (i) the Multilateral Convention on Administrative Assistance in Tax Matters, (ii) bilateral tax treaties or (iii) Tax Information Exchange Agreements, provided that certain conditions are satisfied by the foreign tax administration. Unfortunately, the automatic exchange of information, as proposed by the OECD, is not subject to the condition that the other country submit to mandatory binding arbitration to effectively resolve disputes.

MNE Concerns

Pyrrhic Victory for Arm's-Length Standard. The agreement on CbC Reports and Global Master Files is a compromise between those pushing for unitary taxation with formulary apportionment and transfer pricing advocates. Even though the latter appear to have won the debate as the arm's-length standard remains, this may prove to be a Pyrrhic victory due to the acceptance of reporting standards and criteria that can easily be reconciled to a unitary taxation formula.

Inappropriate Use. The CbC Report is intended to be used by tax administrations to assess transfer pricing and BEPS risks, so that they can better allocate their audit resources and target their audit enquiries. The OECD notes specifically that jurisdictions should not propose adjustments to the income of a taxpayer on the basis of an income allocation formula based on the data from the CbC Report and that any such adjustments should be conceded promptly in any Mutual Agreement Procedure in the event of a transfer pricing dispute. It is questionable, however, if these intended safeguards indeed provide sufficient comfort to MNEs, as (i) they do not protect against transfer pricing adjustments that, although not based on formulary apportionment, are clearly tainted by such approach, and (ii) in many instances, the competent authority of the home jurisdiction of the MNE may not be a party to such transfer pricing dispute and may therefore not have a place at the table or much leverage in a Mutual Agreement Procedure.

Increase of Transfer Pricing and PE Disputes. There is consensus within the OECD that profits should be taxed where economic activities generating the profits are performed and where value is being created. In practice, however, tax administrations have differing views on what this means. In the absence of an effective dispute resolution mechanism, this is a significant concern to MNEs. The new reporting requirements will significantly increase this concern, because tax administrations of individual countries can be tempted to construe the data in the CbC Reports and Global Master Files to fit their particular perspective. This is undoubtedly going to result in more transfer pricing disputes globally and, possibly, disputes about the existence of taxable branches or permanent establishments.

No Mandatory Binding Arbitration. The OECD's work on Action 14 regarding dispute resolution is not progressing at the same pace as Action 13 and certain other actions. Unfortunately, there is no consensus within the OECD with respect to what would constitute an effective dispute resolution mechanism. According to the OECD, only 20 countries have expressed a willingness to adopt mandatory binding arbitration. Once the proposed measures of Action 13 enter into force, MNEs will thus be subjected to additional reporting requirements and the sharing of CbC Reports with governments that reject mandatory binding arbitration in the event of disputes.

Confidentiality. The CbC Reports and Global Master Files can include highly sensitive competitive information about the MNEs. The OECD recommends that tax administrations implement legal and systematic safeguards to ensure that no sensitive competitive business information from the CbC Reports will be leaked, that all information included in the CbC Reports will remain confidential and that the tax administration of the home jurisdiction is allowed to refuse to share CbC Reports if those safeguards are not met. Recent leaks of confidential governmental information and naming and shaming in the press may not give much comfort to MNEs that confidentiality of their information will be guaranteed.

No Way Back Even Without the United States

Despite concerns expressed by MNEs, practitioners, academics and politicians,2 the consensus reached so far means that MNEs will be confronted with these new reporting requirements, even if their home jurisdiction ultimately decides not to endorse Action 13. Many countries are likely to require MNEs to submit a CbC Report and Global Master File in their jurisdiction, regardless of whether such MNE is required to produce these reports in its home jurisdiction. It is of no surprise that some of the jurisdictions that were very quick to endorse CbC reporting are also the jurisdictions that pose most of the above-described concerns.

Next Step: Public CbC Reporting (EU Commission Proposal)

On 17 June 2015, the European Commission launched a public consultation on corporate tax transparency in the European Union. The consultation aims to assess if country-by-country reporting should become public and is scheduled to close on 9 September 2015. Given the keenness of the European Commission to respond to the public sentiment regarding the tax affairs of MNEs and the country-by-country precedents for financial institutions and large extractive and logging industries under the EU Capital Requirements Directive, EU Accounting Directive and EU Transparency Directive, MNEs should get prepared for this possible next step, which would clearly aggravate all of the above concerns.


Dry Run. MNEs that have not done so already should conduct a dry run and prepare a draft CbC Report and Global Master File to learn from the reports' contents. Adverse findings can then still be corrected, underlying documentation and transfer pricing can be improved and the MNE can even decide to restructure its business model, all in anticipation of the tax administration's review.

Review Existing Local Reporting Practices. Some of the most relevant data in the CbC Report are likely to come from the financial statements of individual subsidiaries. Until recently, local financial reporting requirements did not receive much attention from MNEs, but choices made when drawing up these financial statements can turn out to appear very relevant when data from the local filings is transposed to the CbC Reports.


[1] See the September 2014 report "Guidance on Transfer Pricing Documentation and Country-by-Country Reporting", the February 2015 guidance note "Guidance on the Implementation of Transfer Pricing Documentation and Country-by-Country Reporting" and the June 2015 report "Country-by-Country Reporting Implementation Package".

[2] See the letters by Senate Finance Committee Chairman Orrin Hatch (R-Utah) and House Ways and Means Committee Chairman Paul Ryan (R-Wis.) to the Secretary of the Treasury of 9 June 2015 and 27 August 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions