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The Latest On BEPS - 30 January 2017


On 27 January 2017, seven additional countries signed the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of Country-by-Country (CbC) reports. Those countries are Gabon, Hungary, Indonesia, Lithuania, Malta, Mauritius and the Russian Federation. The signing took place at a ceremony held during the second meeting of the inclusive framework on BEPS on 26-27 January 2017. This brings the number of signatories up to 57.

On 25 January 2017, a Memorandum of Understanding (MoU) was signed between the OECD and Intra-European Organisation of Tax Administrations (IOTA) at the 93rd Session of the OECD Committee on Fiscal Affairs held in Paris. Under this MoU, the OECD and IOTA work on their common objective of fair and efficient tax systems and administration. Implementation and monitoring of the BEPS project, the automatic exchange of information, developing common approaches towards capacity building of tax officials within Eurasian Tax Administrations, and conducting studies and compiling data on tax administrations in partnership with the Inter-American Center of Tax Administrations (CIAT) and International Monetary Fund (IMF) are among the focus areas. This MoU will enter into effect on 1 February 2017 and shall remain in effect until 31 January 2019.

On 24 January 2017, the Platform for Collaboration on Tax, a joint initiative of the IMF, OECD, United Nations and World Bank Group, released a draft toolkit designed to assist developing countries address the lack of comparables for transfer pricing analyses and provide supplementary material on minerals pricing, Addressing the Information Gaps on Prices of Minerals Sold in an Intermediate Form. This draft toolkit, consisting of four parts, focuses on practical measures to address difficulties associated with insufficient information available on comparables. Part 1 addresses the difficulties in performing a comparability analysis, whereas part 2 focuses on making best use of the available data, and suggests ways on how available data can be optimized though widening the criteria of data- selection and comparability adjustments. Part 3 focuses on approaches to apply and solutions that may be available, in absence of comparable data and the final part, part 4, provides summaries, conclusions and recommendation for further work. This toolkit will help developing countries to build and strengthen their transfer pricing regimes, which will in turn aid them in implementing the BEPS framework. Comments on this draft toolkit and supplementary material are to be submitted to a common comment box for all the platform organizations ( by 21 February 2017.


On 3 November 2016, the Estonian Government approved a draft regulation on CbC reporting requirements. The draft law needs to be adopted by the Parliament which can be expected within the next few months. Under the draft regulation, the ultimate parent entities (UPEs) of multinational enterprise (MNE) groups headquartered in Estonia with total consolidated group revenue of at least €750 million are required to file the CbC report. The CbC reporting obligation applies for financial years starting on or after 1 January 2016. Under the secondary filing mechanism, the CbC report will need to be filed by the Estonian taxpayer where the country of the parent entity of the Estonian taxpayer does not require it to file a CbC report, there is no qualifying agreement for the exchange of CbC reports with the country of the ultimate parent, or an agreement is in place, but there has been a systematic failure of the exchange. A one-year reprieve or delay is granted for filing under such a secondary mechanism, thus local filing is only required for financial years starting after 1 January 2017. Moreover, if the MNE group appoints a surrogate entity and meets other criteria, the secondary filing mechanism will not be activated. Moreover, an Estonian constituent entity will need to notify the tax authorities of whether it is the reporting entity. If it is not the reporting entity, it shall notify the identity and the tax residency of the reporting entity, within six months of the reporting fiscal year. Estonia is a signatory to the OECD MCAA on the automatic exchange of CbC reports. Hence, any CbC report submitted in Estonia will be exchanged automatically with the tax authorities in those jurisdictions where a group operates provided that these jurisdictions are also a party to the MCAA on CbC reporting.


On 20 December 2016, the Policy and Resources Committee in Guernsey issued “The Income Tax (Approved International Agreements) (Implementation) (Country by Country Reporting) Regulations, 2016” (CbCR regulations). According to these CbCR regulations, the primary obligation to file CbC reports lies with the Guernsey headquartered UPEs of MNE groups with total consolidated group revenue of at least €750 million.

The regulations also include a secondary filing mechanism according to which, if the UPE is not resident in Guernsey and any of the following conditions are met:

a. It is not obligated to file a CbC report in its country of residence.

b. There is not a sufficient and qualifying exchange of information instrument in place between Guernsey and that jurisdiction.

c. There is a systemic failure of the jurisdiction.

Then a Guernsey constituent entity is required to file a CbC report in Guernsey. Subject to certain conditions, the regulations further provide an option to appoint a foreign constituent entity as the surrogate parent entity (SPE) that would file the CbC report in its country of residence on behalf of the group. The CbC reporting obligation applies for financial years starting on or after 1 January 2016.

Furthermore, a Guernsey group entity of an MNE group is required to notify their tax authorities if it is a UPE or SPE within six months after the last day of the reporting fiscal year. Moreover, every Guernsey resident constituent entity that is not a UPE or SPE is required to notify the tax authorities about the identity and tax residence of the entity filing the CbC report by 30 November in the year after the last day of their reporting fiscal year (i.e., by 30 November 2017 for MNE groups having a reporting fiscal year ending 31 December 2016).

The CbC report shall be filed electronically and no later than 12 months after the last day of the reporting fiscal year of the MNE group. In case of failure to comply with the CbCR obligation, in addition to civil and criminal penalties, the reporting entity will be guilty of an offense and liable on summary conviction to imprisonment for a term not exceeding one year, to a fine not exceeding twice level 5 on the uniform scale (i.e., £20,000), or to both.


On 22 December 2016, the Icelandic Ministry of Finance and Economic Affairs issued a regulation on CbC reporting requirements. The regulation provides for a parent company resident in Iceland to file a CbC report with the tax authority within 12 months after the close of the group’s financial year. Additionally, the regulation puts forward a secondary filing mechanism, according to which an Icelandic resident entity will be required to file the CbC report in Iceland where the foreign parent company: (i) Is not required to file a CbC report under local laws in its country of residence; (ii) Iceland does not have an automatic exchange of information agreement with the foreign parent company’s country of residence; or (iii) an agreement is in place, but there has been systematic failure of the exchange. Where the Icelandic entity is unable to obtain all the required information from the foreign parent company, it should notify the tax authorities about the extent of the information obtained and submitted. Furthermore, the Icelandic rules do not seem to fully align with the OECD recommendations in BEPS Action 13 as it provides that the CbC report shall contain material information about the entities in the consolidated group, i.e., residence and main business activity. This indicates that Iceland is applying an entity approach instead of the recommended country approach. The regulation will be effective from 1 January 2017 and apply to reporting fiscal years commencing on or after 1 January 2017.


On 17 January 2017, the Dutch State Secretary for Finance submitted a bill proposing to implement European Union (EU) Directive (Directive 2016/881 of 25 May 2016 amending Directive 2011/16) regarding the automatic exchange of information in the field of taxation. The Bill proposes to amend the existing OECD-based CbC regulations in the Netherlands to provide for the automatic exchange of CbC reports with Member States where the members of the Dutch MNE group are resident for tax purposes or conduct activities through a permanent establishment (PE). Also, it proposes to amend the legislation to provide for a possibility for appointment of an EU-designated entity as the reporting entity for all group entities resident in Member States. Where the ultimate parent company resident in another Member State refuses to provide that Dutch entity with the information necessary to complete the CbC report, an additional notification requirement is posed on the Dutch group entity. It also proposes to provide for additional conditions to the form and content of the notifications and sanctions for failure to correctly provide the notification. The bill, if passed, will be effective from 5 June 2017, with effect for financial years commencing on or after 1 January 2016. The CbC report will be exchanged within 15 months of the last day of the period to which the report pertains (18 months for the first reporting period commencing on or after 1 January 2016).


On 12 January 2017, the Inland Revenue Authority of Singapore (the IRAS) released revised transfer pricing guidelines  (the 2017 TP Guidelines). Key features include more guidance on the arm’s length principle and emphasis on risks (specifically in connection with BEPS Actions 8-10), additional information requirements to be included in transfer pricing (TP) documentation, changes to the Mutual Agreement Procedure (MAP) and Advanced Pricing Arrangement (APA) programs.

The 2017 TP Guidelines provide greater details relating to a number of BEPS Actions. For example, Action 5 for the automatic exchange of a unilateral APA would require meeting certain conditions such as having in place tax treaties or an automatic exchange of information mechanism. On Action 13, the IRAS appears to be aligning the Singapore TP documentation with the OECD Master File and Local File requirements although gaps continue to exist between the Singapore and OECD approaches. There is also the introduction of a safe harbor for loans. Moreover on Action 14, the IRAS targets to resolve MAP applications within 24 months from receiving the taxpayer’s complete application. Furthermore, under the guidance the IRAS has reiterated its adherence to the arm’s length principle by clarifying that profits should be taxed where the real economic activities generating the profits are performed and where value is created.

See EY Global Tax Alert, Singapore tax authorities release 2017 transfer pricing guidelines, dated 20 January 2017.

South Korea

On 28 December 2016, the Korean Ministry of Strategy and Finance announced the draft presidential decree under the Law for Coordination of International Tax Affairs, which includes advance notification requirements for CbC reporting. The draft presidential decree would require advance notification by multinational companies who have CbC reporting requirements. The draft presidential decree requires CbC reporting by the UPE of a multinational consolidated group, if the consolidated group’s annual revenue for the preceding fiscal year exceeds KRW1t (approximately €800m). The Korean subsidiary or branch of a foreign-based multinational company would also have a CbC reporting requirement, if the country of residence of the ultimate parent does not have the CbC reporting requirements, or the country of residence of the ultimate parent has not entered into the multilateral agreement on the exchange of CbC reports. The advance notification should be filed by six months after the relevant fiscal year-end (e.g., the advance notification for 2016 for a multinational company with a reporting fiscal year coinciding with the calendar year is due by 30 June 2017). The draft presidential decree is expected to be finalized and enacted by February. The presidential decree would be effective immediately after enactment and would apply to tax years beginning on or after 1 January 2016.

United States

On 19 January 2017, in Revenue Procedure 2017-23 (the Revenue Procedure), the United States (US) Internal Revenue Service (IRS) issued guidance for the process for voluntarily filing Form 8975, Country-by-Country Report, and Schedule A, Tax Jurisdiction and Constituent Entity Information (CbC report), for reporting periods beginning on or after 1 January 2016, but before the applicability date in Reg. Section 1.6038-4 (early reporting periods). The draft CbC report and accompanying draft Schedule A were posted on the IRS website on 8 December 2016.

See EY Global Tax Alert, US IRS issues guidance on Country-by-Country Reports for early reporting periods, dated 23 January 2017.


On 5 January 2017, the Uruguayan Government adopted the bill on transparency that among other things introduced the three-tiered approach to transfer pricing documentation developed as part of Action 13 of the OECD’s BEPS project, consisting of a CbC report, Master File and Local File. There are no major changes from the draft bill that was submitted in July 2016, regarding CbC, Master File and Local File reporting requirements.

EYG no. 00399-171Gbl

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