Country-By-Country Reporting (CBCR) is simply a report produced by multi-national enterprises (MNEs) showing their revenue, profit before tax, tax paid, tax accrued, capital, tangible earnings, retained earnings and their total number of employees, for each tax jurisdiction in which they operate. They are also required to identify each group member doing business in each jurisdiction along with details of their business activities.
The UK was one of the first to commit to CBCR, requiring UK-headed MNEs with consolidated turnover of at least €750m to file CBC Reports. The UK may also require the top UK-based entity of a non-UK headed MNE to file a CBC Report for the members of its sub-group and will soon be extending the regulations to include partnerships.
Country-by-country reports will need to be filed for all accounting periods starting on or after 1 January 2016 for MNEs that are in scope.
HM Treasury now also has the power to implement public CBCR, i.e. to require MNEs to publish their CBC Report, in line with the UK’s position on greater tax transparency and public disclosure of the tax affairs of MNEs. However, the UK remains firmly committed to public CBCR agreed on a multilateral basis, so there will need to be sufficient international agreement.
In the meantime, CBC Reports will be shared by countries in accordance with international exchange of information agreements, but kept confidential and used mainly for tax risk assessment.