KPMG report: Country-by-country reporting, proposed regulations in United States

The US Treasury and IRS have published final regulations requiring annual country-by-country (CbC) reporting by US ultimate parent entities of multinational groups with annual revenue of $850 million or more in the preceding year. The preamble to the final regulations examines comments received in response to the draft regulations and explains why certain comments were or were not adopted. Generally, the US rules are in line with the OECD model legislation and the recent further OECD guidance.

Voluntary filing for periods beginning before 30 June 2016

While the final regulations are not applicable for tax years of ultimate parent entities beginning before 30 June 2016, the preamble explains that the US will allow voluntary filing for periods beginning on or after 1 January 2016.
Further details on voluntary filing were included in the recent OECD additional guidance (covered in a previous edition of Tax Matters Digest). Broadly, US voluntary filing by a US tax-resident ultimate parent entity should be sufficient to prevent the secondary filing obligations in other jurisdictions provided that, by the first filing deadline of the CbC report, a Qualifying Competent Authority Agreement is in effect between the US and the other jurisdictions.

 

Our understanding is that the US does not intend to sign up to the Multilateral Competent Authority Agreement covering the exchange of CbC reports, and will therefore have to put in place bilateral agreements with each jurisdiction. The expectation is that these arrangements will be in place by the first filing deadline, but US parented groups should continue to monitor the position as it develops 

Proposed regulations (REG-109822-15) were published in today’s edition of the Federal Register to require annual country-by-country (CbyC) reporting for parent entities of large U.S.-based multinational groups (U.S. MNE groups). The proposed regulations would apply for U.S. persons that are the ultimate parent entity of a MNE group that has annual revenue for the preceding annual accounting period of $850 million or more.

 

Read text of the proposed regulations [PDF 252 KB] on country-by-country (CbC) reporting. These regulations are scheduled to be published in the Federal Register on December 23, 2015.

 

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