On 20 April 2016, Bermuda became the 33rd signatory of the Multilateral Competent Authority Agreement for the automatic exchange of Country-by-Country reports (“CbC MCAA”), which is based on Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and puts in place the automatic exchange framework for exchanging Country-by-Country Reports, as contemplated by BEPS Action 13.
Under the CbC MCAA, tax administrations where a company operates will get aggregate information annually, starting with 2016 accounts, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within a multinational enterprise group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.
The information will be collected by the country of residence of the parent of the MNE group, and will then be exchanged in accordance with the agreements now also signed by Bermuda. First exchanges will start in 2017-2018 on 2016 information. In case information fails to be exchanged, the BEPS Action 13 report provides for alternative filing so that the playing field is levelled.
For more information about the MCAA Country-By-Country Reporting, see: www.oecd.org/tax/automatic-exchange/about-automatic-exchange/country-by-country-reporting.htm.
For more information on BEPS, see www.oecd.org/tax/beps.htm.