Friday 9 February 2018

OECD updates CbCR-Guidance covering consolidated group revenue definition, confidentiality condition non-compliance

The Inclusive Framework on BEPS releases additional guidance to give certainty to tax administrations and MNE Groups on the implementation of Country-by-Country (CbC) Reporting under BEPS Action 13; Additional guidance addresses 2 specific issues – a) definition of total consolidated group revenue and b) whether non-compliance with the confidentiality, appropriate use and consistency conditions constitutes systemic failure; On the first issue, OECD Guidance clarifies that if an MNE Group which does not have equity interests traded on a public securities exchange use consolidated financial statements based on accounting principles/standards different from those that are used to determine the existence of and membership of a group under Article 1.1 of the Model Legislation, then such MNE Group will still be required to calculate 'total consolidated group revenue’ for the purposes of Article 1.3 based on the accounting standards to be used for identifying a group under Article 1.1.;  On the second issue, OECD Guidance states that if a jurisdiction does not in practice meet the conditions of confidentiality, appropriate use or consistency, a Competent Authority may temporarily suspend the exchange of information by giving notice in writing if it is determined that there is or there has been significant non-compliance by the other Competent Authority; However, noting that consequences of non-compliance with conditions of confidentiality, consistency and appropriate use will depend on the terms of the Qualifying Competent Authority Agreement (QCAA) between the jurisdictions, OECD Guidance clarifies that “Because a temporary suspension of exchange of information under Section 8 is in accordance with the terms of the relevant QCAA, this does not constitute Systemic Failure”; Separately, OECD also releases compilation of approaches adopted by member jurisdictions of the Inclusive Framework with respect to issues where the guidance allows for alternative approaches 

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