Country-by-country reporting: What’s your plan?

By Stuart MacPherson

The idea of country-by-country reporting – where multinationals report the payments they make to governments (including taxes), in each country in which they operate – has steadily gained momentum over the past few years.

Companies in the financial services sector and extractive industries have already been grappling with the idea for a while due to, the Capital Requirements Directive IV and the EU’s Accounting and Transparency Directives.

The OECD’s recommendations will bring country-by-country reporting to the masses – in business terms, at least. Their Action Plan, published in July last year, called for a template for reporting of income, taxes and economic activity. They maintain that this will help tax authorities understand where the biggest tax risks are, and as a result where most of their efforts on discouraging tax avoidance should be concentrated.

Different countries will adopt the proposals at different rates – the UK is likely to be the first of the OECD’s 34 member countries to adopt - but it’s important that you start preparing well before you’re required to by law.

Here are a few questions to help you with this:

  • What will country-by-country reporting reveal about your tax position?
  • Is country-by-country reporting compatible with your existing tax processes?
  • Will you need to collect more information? If so, can your existing systems cope, or will you need to upgrade?
  • Are you confident about the data you’ll be reporting – is it accurate and reliable?

This is a significant task and hopefully you are already well along the road to putting in place the systems and processes your company may need. The right planning now will save a lot of pain later.

To find out more, watch our video to hear our specialists discuss this in detail or contact your usual PwC advisor.