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HMRC consults on draft regulations on country-by-country reporting

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06 Oct 2015

HM Revenue & Customs (HMRC) has issued a consultation on draft regulations to implement country-by-country reporting in the UK for accounting periods beginning on or after 1 January 2016.

The draft regulations give effect to the Base Erosion and Profit Shifting (BEPS) Action Plan adopted by the Organisation for Economic Development (OECD) and G20 countries in respect of the provision of information concerning high-level transfer pricing and other BEPS related matters.  The ultimate aim is to improve transparency between multinational businesses and tax authorities to help identify tax avoidance.

The draft regulations will require certain multinational enterprises to report electronically via a country-by-country report annually to HMRC.  The report will need to be produced by multinational enterprises with parent entities resident in the UK and with consolidated group revenue of £586m or more in a 12 month accounting period.  The report will need to contain the following for each tax jurisdiction in which they do business:

  • the amount of revenue, profit before income tax and income tax paid and accrued; and
  • their total employment, capital, retained earnings and tangible assets.

Those multinational enterprises will also be required to identify each entity within the group doing business in a particular tax jurisdiction and to provide an indication of business activities within a selection of broad areas which each entity engages in.

Country-by-country reports will be automatically shared by relevant countries in accordance with international agreements governing the exchange of information.

The consultation which closes on 16 November 2015 is available on the HMRC website.

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