www.pwc.com/sg/tax
Country by country reporting –
What does this mean for you?
PwC Singapore Tax
Bulletin – OECD BEPS
Project Special
Newsletter
9 July 2015
On 8 June 2015, the Organisation for Economic Co-operation and Development (OECD)
released the Country-by-Country Reporting (CbCR) implementation package as part of
Action item 13 of the Base Erosion & Profit Shifting (BEPS) initiative. The CbCR
workstream, a key pillar underpinning the BEPS initiative, will complement the OECD’s
efforts to stamp out BEPS activities by enhancing tax transparency through the sharing of
key tax information of Multinational Corporation (MNC) groups.
In broad terms, the purpose of CbCR is for MNC groups to disclose key aspects of their
global tax profile to revenue authorities for risk identification purposes. In practical terms,
there are two broad implications for MNC groups arising from CbCR:

Additional (and likely very significant) compliance requirements – This
will entail the collection of consistent and coherent financial information across
the entire MNC group. MNC groups should consider how they may get their
system and processes ready to meet the disclosure requirement, including possibly
across different jurisdictions; and

Deeper insights – CbCR will provide an overview of an MNC group’s global
profit allocation in relation to its various operations and activities in various
territories. MNC groups should carefully assess what this may mean for its tax and
transfer pricing policy in light of these disclosures as transparency and visibility to
various tax authorities increases.
Overview of CbCR workstream to date
The OECD first released the CbCR template in September 2014. The CbCR template sets
out the key financial information that MNC groups are required to report on the global
allocation of income, the taxes paid and certain indicators of the location of economic
activity for each tax jurisdiction in which they do business. The key financial information
required includes revenue (split into related and unrelated party revenue), profit before
tax, tax paid and accrued, capital, accumulated earnings, number of employees and
tangible assets (excluding cash and equivalents). The template also requires the
identification of the main business activities performed in each jurisdiction.
The OECD has stressed that the CbCR report should be used to assist tax administrations
in making high-level transfer pricing risk assessment - such as selecting appropriate cases
for transfer pricing audit, and not as a substitute for a detailed transfer pricing analysis.
The OECD has stated that the information in the CbCR report on its own does not
constitute conclusive evidence on whether transfer prices are appropriate or not, and it
should therefore not be used by tax administrations to propose transfer pricing
adjustments based on a global formulary apportionment of income 1.
The OECD subsequently released the CbCR implementation guidance in February 2015.
The CbCR implementation guidance recommends that countries should adopt the
following principles for implementing CbCR:

Scope: MNC groups with revenues above Euro 750 million (approximately USD
849 million or SGD 1 billion). It is not anticipated that there will be any exclusions
OECD September 2014 deliverable on Action 13 “Guidance on Transfer Pricing Documentation and Country-byCountry Reporting”.
1
1
for specific industries or for entity types (e.g., non-corporate entities or non-public
corporate entities);

Effective date: Preparation of CbCR reporting template2 for fiscal years beginning
on or after 1 January 2016. This means that tax administrations could begin
exchanging the first CbCR information collected in 2017.

Mechanism: Exchange of information (EoI) will be done based on the Automatic
EoI mechanism.3 Jurisdictions should require CbCR reporting from ultimate
parent entities of MNC groups resident in their country.4
For full details of this discussion draft, please refer to the OECD draft on Action 13
“Guidance on the implementation of Transfer Pricing Documentation and Country by
country Reporting”. For PwC’s summary of the above document, please refer to our PwC
Tax Policy Bulletin of 10 February 2015 “Multinationals receive OECD country-by-country
reporting, multilateral instrument and IP tax incentive BEPS proposals”.
On 8 June 2015, the OECD issued further guidance on the CbCR implementation package.
The new implementation package provides guidance and model legislation on how States
may introduce the requirements for the ultimate parent entity of a MNC group to file the
CbCR report.
The OECD has also provided additional guidance on when the secondary filing mechanism
discussed in February 2015 applies. Secondary filing will be required when the ultimate
parent entity is not obligated to file a CbCR report in its jurisdiction of tax residence (or
where there is a mismatch on the timing of the inter-governmental agreements entered
into) or the territory involved has not complied with the principles under the AEOI
mechanism.
One serious concern of the business community arising from the CbCR requirement
relates to the confidentiality of the information provided and how such information will be
used by tax authorities. In this respect, the OECD has reiterated as part of further
guidance on the CbCR implementation package that the CbCR report should only be used
for “high-level transfer pricing risk assessment purposes” where “[t]ransfer pricing
adjustments by the [Country Tax Administration] will not be based on the CbCR report”.
For full details of this discussion draft, please refer to the additional guidance provided by
the OECD on 8 June 2015 relating to the CbCR implementation package. For PwC’s
summary of the above document, please refer to our PwC Tax Policy Bulletin of 12 June
2015 “OECD releases model documents for implementing country-by-country reporting”.
With the CbCR implementation guidance, it is expected that the CbCR report will be
subject to the automatic EoI mechanism. Under the automatic EoI platform, tax
authorities will exchange the CbCR with the relevant tax authorities (i.e., tax authorities of
the jurisdictions in which a MNC group conducts its business operations) on an automatic
basis.
The CbCR template issued by the OECD in September 2014 to be used as the basis.
During the G-20 Finance Ministers meeting of September 2014 in Cairns (Australia), the G-20 representatives
endorsed the plan to automatically exchange information on a reciprocal basis by end of 2018.
4 Under certain circumstances (e.g., if the jurisdiction of the ultimate parent does not adopt the CbCR standards),
it is recommended for States to adopt a secondary mechanism through local filing or by moving the obligation for
CbCR report filing and automatically exchanging these reports to the next-tier parent country.
2
3
2
Have any other territories committed to introducing the CbCR
requirements?
Following the release of the CbCR template as part of the OECD deliverable for Action 13
in September 2014, 44 countries have committed to formally implementing the CbCR
requirement. Since then, the UK has issued draft legislation on CbCR implementation as
part of the 2015 Finance Bill. Similarly, Spain has announced that changes to their income
tax regulations will incorporate CbCR requirements. Australia has also recently
announced its commitment to implement CbCR as part of their 2015 Budget.
We expect that more territories will commit to implementing CbCR to meet their
international obligations on tax transparency and EoI.
Does CbCR matter to Singapore based companies?
Singapore has not formally implemented CbCR into its tax legislation. However, it is
believed that Singapore has to consider how to practically implement CbCR with the
perspective of meeting this international obligation, as is now expected of all responsible
tax regimes.
If the Singapore Government were to implement CbCR, there are a number of points
within the CbCR implementation package that should be clarified by the IRAS, for
instance:

Scope – Will the IRAS adopt the same revenue thresholds (i.e., EUR 750 million)
for ascertaining which MNC groups need to prepare CbCR reporting file?

Information to be submitted – Will the same group and financial information
as per the OECD CbCR template be required? In this respect, the IRAS could also
consider issuing more detailed guidance on how MNC groups may fill up the
CbCR template. For instance, there is currently little certainty on the definition of
the financial information to be reported (e.g., where financial accounts are
prepared in different jurisdictions based on different accounting standards
(GAAP), which GAAP should apply?). IRAS may consider developing more
detailed guidance in this respect.

Timing – When should affected taxpayers in Singapore start collecting such
financial data? When should taxpayers provide the information to IRAS (e.g., in
accordance with the corporate income tax return filing timelines)?

Mechanism – How should the taxpayers provide the information (e.g., as a
supplement to the corporate income tax return filing)? How would IRAS exchange
the information with other tax authorities?
What you should be thinking about?
If your group is a Singapore-based subsidiary MNC group, you may like to check internally
within your group whether your parent entity will be responsible for collating this data or
provide support in the information collection process. It should be noted that the OECD’s
CbCR template provides a framework where groups may provide additional information
or details of individual group entities. You may like to consider whether the complexity
and various tax attributes (e.g., profit allocation vis-à-vis the functions performed, assets
owned and risks assumed) of the Singapore-based entity’s operations warrant a deeper
look at these reporting requirements and tax profiles revealed by these data.
3
If your group is a Singapore-headquartered MNC group, you should prepare for the CbCR
implementation in Singapore. You should review whether such group level financial
information is readily available to you. Many are realising that there are significant
challenges involved in collating relevant financial information and that significant lead
time is required to ensure a suitable solution can be implemented. It would be prudent to
consider the implications of how tax authorities may view the information reported in its
individual territories. This information should be in relation to the MNC group’s global
activities and operations as well as functions performed, assets owned and risks assumed
in the respective jurisdictions.
MNC groups may want to consider preparing a mock-up of the CbCR report based on
existing data and (re)consider the robustness of its tax and transfer pricing policies, and
whether its existing policies reflect the realities of this globalized and digitized economy.
In light of the broader BEPS project and the ever increasing transparency of tax
information, it is important that MNC groups use this opportunity to reflect on their tax
strategy, tax policies, tax risks, legal structure and business structure (including TP) and
also consider what the CbCR information will suggest about their tax profile.
Your PwC contacts
If you would like to discuss the impact of these developments on your group’s affairs,
please feel free to reach out to any of the facilitators or your local PwC Contact.
Chris Woo
Head of Tax
Email: [email protected]
Paul Lau
Partner, Financial Services
Email: [email protected]
Chai Sui Fun
Partner, Transfer Pricing, Tax Controversy
and Dispute Resolution
Email: [email protected]
Liam Collins
Partner, Global Structuring
Email: [email protected]
Vivienne Junzhao Ong
Senior Manager, Global Structuring
Email: [email protected]
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice.
You should not act upon the information contained in this publication without obtaining specific professional advice. No
representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this
publication, and, to the extent permitted by law, PricewaterhouseCoopers Services LLP, its members, employees and agents
accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in
reliance on the information contained in this publication or for any decision based on it.
© 2015 PricewaterhouseCoopers Services LLP. All rights reserved. “PricewaterhouseCoopers” and "PwC" refer to
PricewaterhouseCoopers Services LLP or, as the context requires, the PricewaterhouseCoopers global network or other member
firms of the network, each of which is a separate legal entity.
4