Stephanie Paiva Sanderson, Corporate Attorney and Chair of the
Bermuda Industry/Government Joint Committee on FATCA and CRS
provides a useful overview of BEPS and CbC reporting as well as how
Bermuda has participated in these regimes.
What is the BEPS Project?
The Base Erosion and Profit Shifting (BEPS)
Project has been a major project for the OECD which has been
working hard for the past couple of years to progress and promote
it globally. The BEPS Project is extensive and comprises 15 Action
Points that provide proposals and plans to deter tax planning
strategies that shift profits (and intellectual property) or take
advantage of loopholes in tax regulations.
The BEPS Project takes aim at various technical issues such as
double non-taxation, hybrid mismatches, treaty shopping, and
What is country-by-country reporting?
One key element of the BEPS Project is a reporting regime called
'country-by-country reporting' (CbC
reporting). CbC reporting is detailed in Action 13 and
requires information to be provided to tax authorities for
scrutiny. Information required to be submitted under the regime
includes details of global business operations, revenue, profits
and tax as well as information on management and organisational
Who needs to comply with CbC reporting?
CbC reporting is applicable to multinational enterprises that
earn over €750million per annum.
What is the CbC reporting regime trying to achieve?
The CbC reporting regime is principally aimed at transfer
pricing which concerns the pricing of goods or services traded
within the same multinational group.
What will the information contained in CbC reports be used
The information submitted to the relevant tax authorities is
mainly intended to be interpreted by tax authorities to allow them
to assess transfer pricing risk.
Is the information submitted by multinational groups under the
CbC reporting regime going to be made public?
CbC reporting is currently not intended by the international
community to be public, although this may be dictated by
jurisdictional laws or may change in future given that there is
some support in the EU for public CbC reports.
How has Bermuda participated so far?
In April 2016, Bermuda became the 33rd signatory of the
agreement for CbC reporting known as the 'Multilateral
Competent Authority Agreement for the automatic exchange of
Country-by-Country reports'. Pursuant to that agreement,
multinational groups based in Bermuda which satisfy the criteria
requiring submission of a CbC report will need to collect and
submit information for fiscal years starting on or after 1 January,
Bermuda continues to keep ahead of competing jurisdictions in
relation to international transparency standards and the
maintenance of its reputation as a forward-thinking blue chip
When will CbC reports need to be filed?
CbC reports should be filed within 12 months after each fiscal
year has ended beginning with the first fiscal year starting on or
after 1 January, 2016.
Is CbC Reporting globally significant?
The CbC reporting regime has continued to see increased global
adoption and implementation - it was recently adopted in the US
through Treasury and IRS regulations1. Despite the steady increase,
several questions remain for the multinational groups who are
required to comply with the regime which, for most, will require
infrastructure changes and new procedures to be put in place. Many
will no doubt be faced with significant operational and technical
challenges in order to comply with the data aggregation aspect and
to ensure the reports tell an accurate story.
In today's 'post-FATCA' world, the transparency and
regulatory landscape continues to become more and more complex.
There is increased exchange of information between governments and
authorities. It is important for multinational companies and those
engaged in international business to keep on top of latest
developments in the jurisdictions in which they operate.
As originally published on IFLR1000.com on 2 August, 2016. This
article is intended for informational purposes only and is not a
substitute for legal advice.
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.
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