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OECD/G20 base Erosion and Profit shifting Project
Guidance on Transfer Pricing Documentation and Country-by-Country ReportingAddressing base erosion and profit shifting is a key priority of governments around the globe. In 2013, OECD and G20 countries, working together on an equal footing, adopted a 15-point Action Plan to address BEPS. This report is an output of Action 13.
Beyond securing revenues by realigning taxation with economic activities and value creation, the OECD/G20 BEPS Project aims to create a single set of consensus-based international tax rules to address BEPS, and hence to protect tax bases while offering increased certainty and predictability to taxpayers. A key focus of this work is to eliminate double non-taxation. However in doing so, new rules should not result in double taxation, unwarranted compliance burdens or restrictions to legitimate cross-border activity.
Contents
Executive summary
Chapter V. Documentation
Annex I to Chapter V. Transfer pricing documentation – Master file
Annex II to Chapter V. Transfer pricing documentation – Local file
Annex III to Chapter V. A model template for the Country-by-Country Report
General instructions for Annex III to Chapter V
Specific instructions for Annex III to Chapter V
www.oecd.org/tax/beps.htm
Guid
ance on Transfer P
ricing D
ocum
entation and
Co
untry-by-C
ountry R
epo
rtingO
EC
D/G
20 base E
rosio
n and
Pro
fit s
hiftin
g P
roject
9HSTCQE*cbjccj+
OECD/G20 base Erosion and Profit shifting Project
Guidance on Transfer Pricing Documentation and Country-by-Country ReportingACTiOn 13: 2014 Deliverable
Consult this publication on line at http://dx.doi.org/10.1787/9789264219236-en.
This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases.Visit www.oecd-ilibrary.org for more information.
AN
NEX
III T
O C
HA
PTER
V. A
MO
DEL
TEM
PLA
TE F
OR
TH
E C
OU
NTR
Y-B
Y-C
OU
NTR
Y R
EPO
RT
– 35
G
UID
AN
CE
ON
TR
AN
SFER
PR
ICIN
G D
OC
UM
ENTA
TIO
N A
ND
CO
UN
TRY
-BY
-CO
UN
TRY
REP
OR
TIN
G ©
OEC
D 2
014
Anne
x III
to C
hapt
er V
A m
odel
tem
plat
e fo
r th
e C
ount
ry-b
y-C
ount
ry R
epor
t
Tabl
e 1.
O
verv
iew
of a
lloca
tion
of in
com
e, ta
xes a
nd b
usin
ess a
ctiv
ities
by
tax
juri
sdic
tion
Name
of th
e MNE
grou
p:
Fisca
l yea
r con
cern
ed:
Tax
Juris
dictio
n
Reve
nues
Pr
ofit
(Los
s) Be
fore
Incom
e Tax
Incom
e Tax
Pa
id (o
n ca
sh ba
sis)
Incom
e Tax
Ac
crued
– Cu
rrent
Year
State
d ca
pital
Accu
mulat
ed
earn
ings
Numb
er of
Em
ploye
es
Tang
ible
Asse
ts oth
er th
an
Cash
and
Cash
Eq
uivale
nts
Unre
lated
Pa
rty
Relat
ed
Party
To
tal
36 –
AN
NEX
III T
O C
HA
PTER
V. A
MO
DEL
TEM
PLA
TE F
OR
TH
E C
OU
NTR
Y-B
Y-C
OU
NTR
Y R
EPO
RT
GU
IDA
NC
E O
N T
RA
NSF
ER P
RIC
ING
DO
CU
MEN
TATI
ON
AN
D C
OU
NTR
Y-B
Y-C
OU
NTR
Y R
EPO
RTI
NG
© O
ECD
201
4
Tabl
e 2.
Li
st o
f all
the
Con
stitu
ent E
ntiti
es o
f the
MN
E gr
oup
incl
uded
in e
ach
aggr
egat
ion
per
tax
juri
sdic
tion
Name
of th
e MNE
grou
p:
Fisca
l yea
r con
cern
ed:
Tax
Juris
dictio
n
Cons
tituen
t En
tities
resid
ent in
the
Tax
Ju
risdic
tion
Tax J
urisd
iction
of
orga
nisati
on or
inc
orpo
ratio
n if
differ
ent fr
om T
ax
Juris
dictio
n of
Resid
ence
Main
busin
ess a
ctivit
y(ies
)
Research and Development
Holding or Managing intellectual property
Purchasing or Procurement
Manufacturing or Production
Sales, Marketing or Distribution
Administrative, Management or Support Services Provision of Services to unrelated parties
Internal Group Finance
Regulated Financial Services
Insurance
Holding shares or other equity instruments
Dormant
Other2
1.
2.
3.
1.
2.
3.
2 P
leas
e sp
ecify
the
natu
re o
f the
act
ivity
of t
he C
onst
ituen
t Ent
ity in
the
“Add
ition
al In
form
atio
n” se
ctio
n.
AN
NEX
III T
O C
HA
PTER
V. A
MO
DEL
TEM
PLA
TE F
OR
TH
E C
OU
NTR
Y-B
Y-C
OU
NTR
Y R
EPO
RT
– 37
G
UID
AN
CE
ON
TR
AN
SFER
PR
ICIN
G D
OC
UM
ENTA
TIO
N A
ND
CO
UN
TRY
-BY
-CO
UN
TRY
REP
OR
TIN
G ©
OEC
D 2
014
Tabl
e 3.
A
dditi
onal
Info
rmat
ion
Name
of th
e MNE
grou
p:
Fisca
l yea
r con
cern
ed:
Plea
se in
clude
any
furth
er b
rief i
nfor
mat
ion o
r ex
plana
tion
you
cons
ider
nece
ssar
y or
that
wou
ld fa
cilita
te th
e un
ders
tand
ingof
the
com
pulso
ry in
form
ation
pro
vided
in th
e co
untry
-by-
coun
try re
port.
GENERAL INSTRUCTIONS FOR ANNEX III TO CHAPTER V – 39
GUIDANCE ON TRANSFER PRICING DOCUMENTATION AND COUNTRY-BY-COUNTRY REPORTING © OECD 2014
General Instructions for Annex III to Chapter V
Purpose
This Annex III to Chapter V of these Guidelines contains a template for reporting a multinational enterprise’s (MNE) allocation of income, taxes and business activities on a tax jurisdiction-by-tax jurisdiction basis. These instructions form an integral part of the model template for the country-by-country report.
Definitions
Reporting MNE A Reporting MNE is the ultimate parent entity of an MNE group.
Constituent Entity For purposes of completing Annex III, a Constituent Entity of the MNE
group is any separate business unit of the MNE group (company, corporation, trust, partnership etc.) that is included in the consolidated group for financial reporting purposes. Entities excluded from financial statements only on size or materiality grounds should be included in the country-by-country report as Constituent Entities.
Treatment of Branches and Permanent Establishments The term Constituent Entity also includes permanent establishments of a
member of the MNE group conducting business in a tax jurisdiction, provided such permanent establishment prepares a separate income statement for regulatory purposes, financial reporting, internal management or tax purposes. The permanent establishment data should be reported by reference to the tax jurisdiction in which it is situated and not by reference to the tax jurisdiction of residence of the Constituent Entity of which the permanent establishment is a part. Residence tax jurisdiction reporting for the Constituent Entity of which the permanent establishment is a part should exclude financial data related to the permanent establishment.
40 – GENERAL INSTRUCTIONS FOR ANNEX III TO CHAPTER V
GUIDANCE ON TRANSFER PRICING DOCUMENTATION AND COUNTRY-BY-COUNTRY REPORTING © OECD 2014
Period covered by the annual template
The template should cover the fiscal year of the Reporting MNE. For Constituent Entities, at the discretion of the Reporting MNE, the template should reflect on a consistent basis either (i) information for the fiscal year of the relevant Constituent Entities ending on the same date as the fiscal year of the Reporting MNE, or ending within the 12 month period preceding such date, or (ii) information for all the relevant Constituent Entities reported for the fiscal year of the Reporting MNE.
Source of data
The Reporting MNE should consistently use the same sources of data from year to year in completing the template. The Reporting MNE may choose to use data from its consolidation reporting packages, from separate entity statutory financial statements, regulatory financial statements, or internal management accounts. It is not necessary to reconcile the revenue, profit and tax reporting in the template to the consolidated financial statements. If statutory financial statements are used as the basis for reporting, all amounts should be translated to the stated functional currency of the Reporting MNE at the average exchange rate for the year stated in the Additional Information section of the template. Adjustments need not be made, however, for differences in accounting principles applied from tax jurisdiction to tax jurisdiction.
The Reporting MNE should provide a brief description of the sources of data used in preparing the template in the Additional Information section of the template. If a change is made in the source of data used from year to year, the Reporting MNE should explain the reasons for the change and its consequences in the Additional Information section of the template.
SPECIFIC INSTRUCTIONS FOR ANNEX III TO CHAPTER V – 41
GUIDANCE ON TRANSFER PRICING DOCUMENTATION AND COUNTRY-BY-COUNTRY REPORTING © OECD 2014
Specific instructions for Annex III to Chapter V
Overview of allocation of income, taxes and business activities by tax jurisdiction (Table 1)
Tax Jurisdiction In the first column of the template, the Reporting MNE should list all of
the tax jurisdictions in which Constituent Entities of the MNE group are resident for tax purposes. A tax jurisdiction is defined as a State as well as a non-State jurisdiction which has fiscal autonomy. A separate line should be included for all Constituent Entities in the MNE group deemed by the Reporting MNE not to be resident in any tax jurisdiction for tax purposes. Where a Constituent Entity is resident in more than one tax jurisdiction, the applicable tax treaty tie breaker should be applied to determine the tax jurisdiction of residence. Where no applicable tax treaty exists, the Constituent Entity should be reported in the tax jurisdiction of the Constituent Entity’s place of effective management. The place of effective management should be determined in accordance with the provisions of Article 4 of the OECD Model Tax Convention and its accompanying Commentary.
Revenues In the three columns of the template under the heading Revenues, the
reporting MNE should report the following information: (i) the sum of revenues of all the Constituent Entities of the MNE group in the relevant tax jurisdiction generated from transactions with associated enterprises; (ii) the sum of revenues of all the Constituent Entities of the MNE group in the relevant tax jurisdiction generated from transactions with independent parties; and (iii) the total of (i) and (ii). Revenues should include revenues from sales of inventory and properties, services, royalties, interest, premiums and any other amounts. Revenues should exclude payments received from other Constituent Entities that are treated as dividends in the payor’s tax jurisdiction.
42 – SPECIFIC INSTRUCTIONS FOR ANNEX III TO CHAPTER V
GUIDANCE ON TRANSFER PRICING DOCUMENTATION AND COUNTRY-BY-COUNTRY REPORTING © OECD 2014
Profit (Loss) Before Income Tax In the fifth column of the template, the Reporting MNE should report
the sum of the profit (loss) before income tax for all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. The profit (loss) before income tax should include all extraordinary income and expense items.
Income Tax Paid (on Cash Basis) In the sixth column of the template, the Reporting MNE should report
the total amount of income tax actually paid during the relevant fiscal year by all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. Taxes paid should include cash taxes paid by the Constituent Entity to the residence tax jurisdiction and to all other tax jurisdictions. Taxes paid should include withholding taxes paid by other entities (associated enterprises and independent enterprises) with respect to payments to the Constituent Entity. Thus, if company A resident in tax jurisdiction A earns interest in tax jurisdiction B, the tax withheld in tax jurisdiction B should be reported by company A.
Income Tax Accrued (Current year) In the seventh column of the template, the Reporting MNE should report
the sum of the accrued current tax expense recorded on taxable profits or losses of the year of reporting of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. The current tax expense should reflect only operations in the current year and should not include deferred taxes or provisions for uncertain tax liabilities.
Stated capital In the eighth column of the template, the Reporting MNE should report
the sum of the stated capital of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. With regard to permanent establishments, the stated capital should be reported by the legal entity of which it is a permanent establishment unless there is a defined capital requirement in the permanent establishment tax jurisdiction for regulatory purposes.
Accumulated earnings In the ninth column of the template, the Reporting MNE should report
the sum of the total accumulated earnings of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction as of the end of the
SPECIFIC INSTRUCTIONS FOR ANNEX III TO CHAPTER V – 43
GUIDANCE ON TRANSFER PRICING DOCUMENTATION AND COUNTRY-BY-COUNTRY REPORTING © OECD 2014
year. With regard to permanent establishments, accumulated earnings should be reported by the legal entity of which it is a permanent establishment.
Number of Employees In the tenth column of the template, the Reporting MNE should report
the total number of employees on a full-time equivalent (FTE) basis of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. The number of employees may be reported as of the year-end, on the basis of average employment levels for the year, or on any other basis consistently applied across tax jurisdictions and from year to year. For this purpose, independent contractors participating in the ordinary operating activities of the Constituent Entity may be reported as employees. Reasonable rounding or approximation of the number of employees is permissible, providing that such rounding or approximation does not materially distort the relative distribution of employees across the various tax jurisdictions. Consistent approaches should be applied from year to year and across entities.
Tangible Assets other than Cash and Cash Equivalents In the eleventh column of the template, the Reporting MNE should
report the sum of the net book values of tangible assets of all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction. With regard to permanent establishments, assets should be reported by reference to the tax jurisdiction in which the permanent establishment is situated. Tangible assets for this purpose do not include cash or cash equivalents, intangibles, or financial assets.
44 – SPECIFIC INSTRUCTIONS FOR ANNEX III TO CHAPTER V
GUIDANCE ON TRANSFER PRICING DOCUMENTATION AND COUNTRY-BY-COUNTRY REPORTING © OECD 2014
List of all the Constituent Entities of the MNE group included in each aggregation per tax jurisdiction (Table 2)
Constituent Entities resident in the Tax Jurisdiction The Reporting MNE should list, on a tax jurisdiction-by-tax jurisdiction
basis and by legal entity name, all the Constituent Entities of the MNE group which are resident for tax purposes in the relevant tax jurisdiction. As stated above with regard to permanent establishments, however, the permanent establishment should be listed by reference to the tax jurisdiction in which it is situated. The legal entity of which it is a permanent establishment should be noted (e.g. XYZ Corp – Tax Jurisdiction A PE).
Tax Jurisdiction of organisation or incorporation if different from Tax Jurisdiction of Residence
The Reporting MNE should report the name of the tax jurisdiction under whose laws the Constituent Entity of the MNE is organised or incorporated if it is different from the tax jurisdiction of residence.
Main business activity(ies) The Reporting MNE should determine the nature of the main business
activity(ies) carried out by the Constituent Entity in the relevant tax jurisdiction, by ticking one or more of the appropriate boxes.
Business activities Research and Development Holding or managing intellectual propertyPurchasing or Procurement Manufacturing or Production Sales, Marketing or Distribution Administrative, Management or Support ServicesProvision of services to unrelated partiesInternal group finance Regulated Financial Services InsuranceHolding shares or other equity instrumentsDormant Other3
3 Please specify the nature of the activity of the Constituent Entity in the “Additional Information” section.
ORGANISATION FOR ECONOMIC CO-OPERATIONAND DEVELOPMENT
The OECD is a unique forum where governments work together to address theeconomic, social and environmental challenges of globalisation. The OECD is also at theforefront of efforts to understand and to help governments respond to new developmentsand concerns, such as corporate governance, the information economy and the challenges ofan ageing population. The Organisation provides a setting where governments can comparepolicy experiences, seek answers to common problems, identify good practice and work toco-ordinate domestic and international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, theCzech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland,Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland,Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdomand the United States. The European Union takes part in the work of the OECD.
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OECD PUBLISHING, 2, rue André-Pascal, 75775 PARIS CEDEX 16
(23 2014 30 1 P) ISBN 978-92-64-21922-9 – 2014
isbn 978-92-64-21922-9 23 2014 30 1 P
OECD/G20 base Erosion and Profit shifting Project
Guidance on Transfer Pricing Documentation and Country-by-Country ReportingAddressing base erosion and profit shifting is a key priority of governments around the globe. In 2013, OECD and G20 countries, working together on an equal footing, adopted a 15-point Action Plan to address BEPS. This report is an output of Action 13.
Beyond securing revenues by realigning taxation with economic activities and value creation, the OECD/G20 BEPS Project aims to create a single set of consensus-based international tax rules to address BEPS, and hence to protect tax bases while offering increased certainty and predictability to taxpayers. A key focus of this work is to eliminate double non-taxation. However in doing so, new rules should not result in double taxation, unwarranted compliance burdens or restrictions to legitimate cross-border activity.
Contents
Executive summary
Chapter V. Documentation
Annex I to Chapter V. Transfer pricing documentation – Master file
Annex II to Chapter V. Transfer pricing documentation – Local file
Annex III to Chapter V. A model template for the Country-by-Country Report
General instructions for Annex III to Chapter V
Specific instructions for Annex III to Chapter V
www.oecd.org/tax/beps.htm
Guid
ance on Transfer P
ricing D
ocum
entation and
Co
untry-by-C
ountry R
epo
rtingO
EC
D/G
20 base E
rosio
n and
Pro
fit s
hiftin
g P
roject
9HSTCQE*cbjccj+
OECD/G20 base Erosion and Profit shifting Project
Guidance on Transfer Pricing Documentation and Country-by-Country ReportingACTiOn 13: 2014 Deliverable
Consult this publication on line at http://dx.doi.org/10.1787/9789264219236-en.
This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases.Visit www.oecd-ilibrary.org for more information.
