In recent years, tax authorities across the globe have adopted a number of OECD-led initiatives aimed at curbing the ability of multinational enterprises to engage in so-called Base Erosion and Profit Shifting (BEPS) (i.e., the artificial shifting of profits, for tax purposes, to low or no-tax jurisdictions). The OECD has achieved considerable buy-in from tax authorities, touting the need to update the international tax rules, which have (it maintains) largely failed to keep up with the dual phenomena of globalization and increasingly digital economies. Country-by-country (CbC) reporting has played a key role in its effort.
U.S. Treasury regulations require that U.S. multinational enterprises (MNEs) provide country-by-country (CbC) reporting. Annual CbC reporting on Form 8975 largely implements the OECD’ country-by-country reporting requirements aimed at addressing base erosion and profit shifting.
What is Country-by-Country (CbC) reporting?