Sunday 23 September 2018

Country-by-country reporting - OECD issues updated guidance

Action 13 of the OECD’s BEPS project introduced country-by-country reporting (CBCR). Since then, the OECD have issued guidance on interpretation of the requirements, and the latest guidance was issued in September 2018. 

The latest guidance (in fact an update and expansion of the previous guidance) focuses on three new areas - treatment of dividends, shortened amounts (rounding) and employee numbers.
Treatment of dividends
Action 13 was already clear the dividends received from “Constituent Entities” should be excluded from “Revenue”, but was silent on whether those dividends should be included in “Profit/(loss) before income tax”.
The guidance allows jurisdictions the flexibility to treat dividends in accordance with applicable accounting rules. The treatment of dividends and jurisdictions should be set out in Table 3.
So rather than prescribing a particular treatment, the OECD has opted to require transparency as to the treatment adopted.
Shortened amounts (rounding)
The guidance states that shortened amount (for example rounded to the nearest thousand) should not be included in Table 1. Amounts should be reported to full whole units.
Employee numbers
Where proportional consolidation is used for other areas of reporting, this should also apply to the reporting on employee numbers. So employees of proportionally consolidated entities should be included on a pro rata basis.
Mergers, demergers and acquisitions
The guidance also contains a table relating to mergers, demergers and acquisitions. It summarises existing interpretative guidance.

It is interesting to see that three years after the BEPS Final Reports were published, guidance on the implementation of CBCR is still being issued. However, this guidance feels very much like tweaks around the edges.
The latest guidance can be found here.

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