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After months of negotiations on a new compromise proposal on public country-by-country reporting (CbCR), the text of the directive on tax transparency for multinationals, which amends accounting Directive 2013/34/EU[1] was finally approved by the Council of the European Union and the European Parliament on 28 September 2021 and 11 November 2021, respectively.
Published in the Official Journal on 1 December 2021, the directive, which requires reporting entities to make publicly available a country-by-country breakdown of the group's profits and certain economic, accounting, and tax aggregates, entered into force on 21 December 2021.[2]
The directive had to be transposed into domestic law by EU member states by 22 June 2023 at the latest. On 23 May 2024, the European Commission announced it would send reasoned opinions to six EU member states that had failed to transpose completely the public CbCR directive into domestic legislation. The six member states have two months to take the necessary measures.
This new reporting obligation will apply for the first time from the beginning of the first financial year starting on or after 22 June 2024.
More than five years after the European Commission's first proposal,[3] negotiations resumed within the EU under the initiative of the Portuguese presidency of the Council of the EU. The Portuguese presidency presented a compromise proposal on 13 January 2021,[4] which was followed by intense negotiations between the Council of the EU and the European Parliament. The two bodies reached a provisional agreement on 1 June 2021, before the adoption of the final text.
While the compromise proposal of January 2021 seemed to better address some companies’ concerns regarding the possible commercial repercussions of this new reporting obligation, the directive finally adopted backed off on some of its terms and tends towards more transparency (notably regarding the safeguard clause, or cases of data aggregation).
The public CbCR obligation constitutes a new and autonomous obligation due to its public nature, with its own scope and reporting rules, particularly compared to the obligation to file a country-by-country report with the tax authorities (the tax CbCR).[5]
Go to the full CBCR article
The two-pillar framework – and specifically Amount B of Pillar One -- is still an important issue for transfer pricing. The OECD recently released additional guidance on Amount B, providing answers to questions that had been left unanswered in its February 2024 report. We also include a report in this issue on Amount B's potential implications for South Africa.
Advance pricing agreements are another perennial transfer pricing topic, and in this issue we report on India’s record number of APAs completed during fiscal year 2023-24, as well as the U.S.’s annual report, which shows that significantly more APAs were executed during 2023 than during the prior year.
Two UK articles round up our coverage in this issue – an analysis of the recent Court of Appeals rulings in the Kwik-Fit and BlackRock cases.
Published in the Official Journal on 1 December 2021, the directive, which requires reporting entities to make publicly available a country-by-country breakdown of the group's profits and certain economic, accounting, and tax aggregates, entered into force on 21 December 2021.[2]
The directive had to be transposed into domestic law by EU member states by 22 June 2023 at the latest. On 23 May 2024, the European Commission announced it would send reasoned opinions to six EU member states that had failed to transpose completely the public CbCR directive into domestic legislation. The six member states have two months to take the necessary measures.
This new reporting obligation will apply for the first time from the beginning of the first financial year starting on or after 22 June 2024.
More than five years after the European Commission's first proposal,[3] negotiations resumed within the EU under the initiative of the Portuguese presidency of the Council of the EU. The Portuguese presidency presented a compromise proposal on 13 January 2021,[4] which was followed by intense negotiations between the Council of the EU and the European Parliament. The two bodies reached a provisional agreement on 1 June 2021, before the adoption of the final text.
While the compromise proposal of January 2021 seemed to better address some companies’ concerns regarding the possible commercial repercussions of this new reporting obligation, the directive finally adopted backed off on some of its terms and tends towards more transparency (notably regarding the safeguard clause, or cases of data aggregation).
The public CbCR obligation constitutes a new and autonomous obligation due to its public nature, with its own scope and reporting rules, particularly compared to the obligation to file a country-by-country report with the tax authorities (the tax CbCR).[5]
Go to the full CBCR article
in this issue you can also find
After years during which the OECD’s two-pillar framework has been the main topic of conversation in international tax and transfer pricing circles, a new topic is gaining prominence – the adoption of public country-by-country reporting (CbCR) requirements. In a push for greater tax transparency, the EU took the lead, and adopted a public CbCR directive that entered into force on December 21, 2021, and applies to fiscal years beginning on or after 22 June 2024. Australia has now followed that lead and recently introduced its own version of public CbCR legislation.The two-pillar framework – and specifically Amount B of Pillar One -- is still an important issue for transfer pricing. The OECD recently released additional guidance on Amount B, providing answers to questions that had been left unanswered in its February 2024 report. We also include a report in this issue on Amount B's potential implications for South Africa.
Advance pricing agreements are another perennial transfer pricing topic, and in this issue we report on India’s record number of APAs completed during fiscal year 2023-24, as well as the U.S.’s annual report, which shows that significantly more APAs were executed during 2023 than during the prior year.
Two UK articles round up our coverage in this issue – an analysis of the recent Court of Appeals rulings in the Kwik-Fit and BlackRock cases.
Content
- Australia:
- Australia’s new era of transparency: Public CbC reporting unveiled
- OECD issues guidance on Pillar 1 Amount B: BDO's summary
- European Union: Public CbCR: a new reporting obligation for multinationals
- India: Tax authorities sign record number of advance pricing agreements
- International: OECD publishes additional Amount B guidance
- Malta: Malta introduces public country-by-country reporting for multinational enterprises
- South Africa: Pillar One and Amount B
- United Kingdom:
- BlackRock ruling clarifies transfer pricing and unallowable purpose tests for intra-group financing
- Kwik-Fit: Interest deductions after a reorganisation to access losses fail unallowable purpose test
- United States:
- IRS’s annual report shows significant increase in number of executed APAs