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BEPS Action 13: Implementation of Transfer Pricing
Documentation and Country-by-Country Reporting
On 6 February 2015 the G20 and OECD, as part of the work on the Action Plan to address Base Erosion and Profit
Shifting (‘BEPS’), released Action 13: Guidance on the Implementation of Transfer Pricing Documentation and
Country-by-Country Reporting ‘(the guidance’). This follows the report issued on 16 September 2014, which
proposed a new three tier global standard for transfer pricing documentation, including a common template for
country-by-country information to be reported to tax authorities and transfer pricing master and local files. The
guidance covers implementation of country-by-country reporting including the timing of introduction, application
to ‘large’ businesses and filing mechanisms.
Deloitte Comments and Business Next Steps
The G20/OECD have confirmed that countries will introduce country-by-country reporting for large multinationals,
beginning with reporting for 2016 calendar year end groups. The UK government has already published draft
legislation to enable country-by-country reporting to be introduced into UK law. Smaller groups with consolidated
revenues below €750 million will be exempt; subject to review in 2020.
Businesses will welcome the announcements in relation to the country-by-country report. It is clear that the
G20/OECD countries intend there to be global consistency as far as possible, which will be helpful in limiting the
additional compliance burden. In particular, as expected, the filing mechanism will require filing at the parent
company level (so for UK-headed groups, with HMRC) and then government-to-government sharing of information.
This will assist with the important issue of preservation of confidentiality of business information.
Businesses will also be pleased to see confirmation from the G20/OECD that it is not open to individual countries to
require additional (or different) information from multinational businesses. This means the template (at Annex III of
the paper issued in September) will be adopted consistently. It is also helpful that the G20/OECD have announced
that countries will commit to using the report for assessing high-level transfer pricing and other risks, rather than for
applying any formulaic apportionment approach.
Whilst much of this is good news for business in relation to country-by-country reporting, disappointingly the
OECD/G20 have confirmed that the global master file will not be subject to filing at the parent company level and
government-to-government exchanges – instead, this will be filed locally where required under local laws.
Businesses will be concerned about the implications for confidentiality and protection of information in relation to, in
particular, their valuable intellectual property.
Large businesses should step-up their preparation for country-by-country reporting, and in particular ensure that
their data, systems and processes can be adapted to obtain the necessary financial and employee data in time.
Timing of the preparation and filing of country-by-country reports
The G20/OECD recommends that country-by-country reporting should be required for groups’ fiscal years
beginning on or after 1 January 2016. Groups with a year ending 31 December 2016 will be the first to file, with a
deadline of 31 December 2017 (twelve months after the accounting year-end of the consolidated group).
Country-by-country reporting for large groups
Groups with consolidated group revenue of less than €750 million in the immediately preceding fiscal year
(approximately £560 million at today’s rates) will be exempt from filing country-by-country reports. The G20/OECD
estimate this threshold will exclude up to 90% of all multinational groups, but will result in approximately 90% of
corporate revenues being included in country-by-country reports. This threshold will be reviewed in 2020 as part of
a wider review of the country-by-country reporting requirement.
There are no exemptions for specific industries, including investment funds, or for non-corporate entities or nonpublic corporate entities. Clarification will be provided on consolidation in relation to investment funds. International
transportation (applicable to airlines and shipping businesses) will require reporting by reference to the country with
taxing rights under a treaty.
Conditions on the obtaining and use of the country-by-country report by jurisdictions
Participating countries have agreed to three conditions on the use of data within country-by-country reports:

Confidentiality: Countries will be required to have in place legal protections on the confidentiality of the reported
information, at least equivalent to information obtained through other treaty-based exchange mechanisms or the
Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Consistency: Countries should adopt the country-by-country reporting requirements in line with the standard
template – and not adopt reduced or increased requirements.

Appropriate use: Countries will commit to using the information within the country-by-country report
appropriately, and in particular will commit to not use the data to make adjustments on the basis of an allocation
formula. Any such adjustments will be overturned in competent authority or other resolution procedures.
Framework for government exchange mechanisms and implementation packages
G20/OECD countries have agreed to jointly develop an implementation package by April 2015. Key elements of
the domestic legislation required to implement the primary filing obligation on ultimate parent companies will be
developed, although countries will need to adapt this to their legal systems. In cases where the country of an
ultimate parent fails to implement country-by-country reporting or information exchange, a secondary mechanism
will be included involving either (i) local filing or (ii) moving the group’s filing obligation to the ‘next tier parent’ (i.e.
sub-holding) country. The secondary mechanism will also be developed as part of the implementation package.
Contacts
Bill Dodwell
Tel: 020 7007 0848
Email: bdodwell@deloitte.co.uk
Shaun Austin
Tel: 0121 695 5011
Email: saustin@deloitte.co.uk
Clive Tietjen
Tel: 0118 322 2904
Email: ctietjen@deloitte.co.uk
Andrew Gwyther
Tel: 020 7303 4051
Email: agwyther@deloitte.co.uk
John Henshall
Tel: 020 7303 2218
Email: jhenshall@deloitte.co.uk
Alison Lobb
Tel: 020 7007 0497
Email: alobb@deloitte.co.uk
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