Base Erosion and Profit Shifting (BEPS) & Country by Country Reporting (CbCR)

• Useful links to relevant material

  • The Income Tax (Approved International Agreements) (Implementation) (Country by Country Reporting) Regulations, 2016  The Income Tax (Approved International Agreements) (Implementation) (Country by Country Reporting) Regulations, 2016 [699kb]
  • Guernsey guidance providing a summary of the practical requirements of the notifications and reporting required under Country by Country reporting  CbCR Reporting Practicalities: Guernsey Guidance v.1 [765kb]
  • OECD webpage providing updates regarding Country by Country Reporting (inlcuding a copy of the Action 13 Report) http://www.oecd.org/tax/beps/country-by-country-reporting.htm
  • OECD publication titled "OECD/G20 Base Erosion and Profit Shifting Project Action 13: Country-by-Country Reporting Implementation Package https://www.oecd.org/ctp/transfer-pricing/beps-action-13-country-by-country-reporting-implementation-package.pdf
  • OECD CbCR schema http://www.oecd.org/ctp/country-by-country-reporting-xml-schema-user-guide-for-tax-administrations.htm
  • BEPS 2015 Final Reports http://www.oecd.org/ctp/beps-2015-final-reports.htm
  • Action 5: 2015 Final Report - Countering harmful tax practices more effectively, taking into account transparency and substance http://www.keepeek.com/Digital-Asset-Management/oecd/taxation/countering-harmful-tax-practices-more-effectively-taking-into-account-transparency-and-substance-action-5-2015-final-report_9789264241190-en#.WTkTJuqGN9B
  • CbCR - A Guide to the Appropriate Use of Information Exchanged  CbCR – A Guide to the Appropriate Use of Information Exchanged [714kb]
  • A Guide to using the Mutual Agreement Procedure in Guernsey's Double Taxation Agreements  A Guide to using the Mutual Agreement Procedure in Guernsey's Double Taxation Agreements [1Mb]
  • Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting - the Convention will enter into force for Guernsey on 1 June 2019
  • IGOR User Guide  IGOR - Guernsey user guide [1Mb]

• Competent Authority Agreements

  •  Bermuda Competent Authority Agreement [7Mb] (signed 4 February & 26 March 2019)
  •  Cayman Competent Authority Agreement [153kb] (signed 8 March 2018)
  •  Gibraltar Competent Authority Agreement [8Mb] (signed 6 June 2019)
  •  Hong Kong Competent Authority Agreement [5Mb] (signed 9 January 2019)
  •  Isle of Man Competent Authority Agreement [35kb] (signed 19 July 2017)
  •  Jersey Competent Authority Agreement [1Mb] (signed 22 December 2017)
  •  Turks & Caicos Competent Authority Agreement [419kb] (signed 19 & 24 September 2018)
  •  United Kingdom Competent Authority Agreement [222kb] (signed 29 November 2017)
  •  United States of America Competent Authority Agreement [131kb] (signed 22 June 2017)

• What is the Country by Country reporting regime?

  • Country-by-country reporting is one of four minimum standards under the OECD Base Erosion and Profit Shifting (BEPS) project that aims to improve transparency between multinational businesses and tax authorities, and to help identify aggressive tax avoidance.
  • Under country-by-country reporting, multinational groups with consolidated group revenue of EUR 750 million or more, are required to report specified data on their international operations to their tax authority annually ("full reporting"), in respect of accounting periods commencing on or after 1 January 2016. That tax authority will in turn disseminate relevant information to jurisdictions with which it has an agreement to exchange such information.
  • Present indications are that due to the current revenue threshold level involved, only a handful of Guernsey entities will be impacted by the introduction of country by country reporting. A consultation on the introduction of country by country reporting in Guernsey was undertaken in October 2016.
  • A secondary aspect of the country-by-country reporting regime requires the separate business units of multinational groups ("MNEs") to provide notification to the tax authority annually as a constituent entity if:
    • (a) they are included in the consolidated financial statements of an MNE for financial reporting purposes, or would be so included if equity interests in such business unit were traded on a public securities exchange;
    • (b) they are excluded from the MNE's consolidated financial statements solely on size or materiality grounds; and
    • (c) they are a permanent establishment of (a) or (b) for which separate financial statements are prepared.

• Who is responsible for submitting full reports - the reporting entity?

  • Broadly the ultimate parent entity of a qualifying multinational group ("MNE") must file, to their tax authority, the relevant CbCR Report on the group's behalf. It is, however, possible for the MNE Group to elect for a different constituent entity to do the reporting (making that entity a "surrogate parent entity").

• Format required for Country by Country reporting (full reports)

  • The Director of the Revenue Service will require that CbCR full reports are made using a web based reporting tool called the Information Gateway Online Reporter (IGOR).
  • The format of the full CbC reporting will be required in an XML format using the schema provided by the OECD, details of which can be found on the following webpage: https://www.oecd.org/tax/automatic-exchange/about-automatic-exchange/country-by-country-reporting-xml-schema-user-guide-for-tax-administrations-and-taxpayers.htm
  • If an entity is part of a multinational group with consolidated group revenue of EUR 750 million or more, there will be a CbCR Reporting requirement, therefore, it will be necessary for that entity to know who the reporting entity for the group is.

• If an entity is not a reporting entity, are there any other filing requirements under country by country reporting?

  • Yes. An entity must notify the Director by 30^th November in the year following the last day of the accounting period if it is a constituent entity. Details of the reporting entity for the multinational group, together with the country of tax residence for the reporting entity and their accounting period end must also be provided.
  • This notification should be given annually on the company tax return. The first report will be required in respect of accounting periods commencing on or after 1 January 2016.
  • If an entity is unsure whether it is a constituent entity, it should contact its parent entity or ultimate parent entity.

• What is a constituent entity?

  • Separate business units of multinational groups ("MNEs") are a constituent entity if:
    • (a) they are included in the consolidated financial statements of an MNE for financial reporting purposes, or would be so included if equity interests in such business unit were traded on a public securities exchange;
    • (b) they are excluded from the MNE's consolidated financial statements solely on size or materiality grounds; and
    • (c) they are a permanent establishment of (a) or (b) for which separate financial statements are prepared.
  • If an entity is unsure whether it is a constituent entity, it should contact its parent entity or ultimate parent entity.

• If an entity is dual resident, what constituent entity notification is required in Guernsey?

  • Dual resident entities will not be required to notify the Director annually that they are a constituent entity, where they are deemed resident in the other territory by virtue of a double taxation arrangement, and they are filing a constituent entity notification in that other territory.

• BEPS Action 5 - Spontaneous exchange of rulings

  • Circular issued on 8th June 2017 to GSCCA and Guernsey Bar Council  Rulings - BEPS Action 5 [264kb]
  • Application for a Guernsey Tax Ruling  Form 702 [79kb].
  • Please ensure that all completed applications are emailed to AEOI@gov.gg with the subject header "BEPS Action 5 Tax Ruling Application".

• Bulletins

  •  Bulletin 2021/1 - CbCR Schema Change & IGOR Reporting Requirements [185kb]
  •  Bulletin 2020/3 - extension to CE reporting deadline [478kb]
  •  Bulletin 2019/4 - Country by Country Reporting [459kb]
  •  Bulletin 2017/8 - CBC Reporting [253kb]
  •  Bulletin 2017/12 - CBC Reporting [260kb]

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