What is Country by Country reporting?
CbC Reporting requires large Multinational Groups of Entities (MNEs) to file a CbC Report that should provide a breakdown of the Multinational Group’s global revenue, profit before tax, income tax accrued and some other indicators of economic activities for each jurisdiction in which the MNE operates. The purpose of CbC Reporting is to eliminate any gap in information between the taxpayers and tax administrations with regards to information on where the economic value is generated within the MNE Group and whether it matches where profits are allocated and taxes are paid on a global level.
Records should be kept by a CbC Reporting Entity for 5 years following the date on which the CbC Report is submitted to the MoF.
Country by Country reporting applies to multinational companies with a combined revenue of euros 750 million or more.
What is due date of filing CbC reports?
The CbC report should be filed within 12 months from the end of the reporting year of the MNE Group. E.g. With respect to the financial year commencing on January 1st 2019 and ending by December 31st 2019, the CbC Report should be filed no later than December 31, 2020.
To whom CbC report is to be filed?
CbC reports are primarily to be filed where parent company is headquartered but if the HQ country has not implemented CbCR, multinational company should appoint a surrogate parent entity who will take care of the filing.
What is a CbC Report?
A report including quantitative and qualitative information about the MNE Group. Information such as revenues, profits, employees count, business description, etc. should be reported under three tables:
- Table I – This contains the quantitative information per tax jurisdiction such as third party and related party revenues, stated capital, taxes accrued and paid, employee count, etc.
- Table II – This contains the qualitative information per constituent entity on the main business activities undertaken during the year.
- Table III – This contains any additional information necessary to facilitate the understanding of Tables I and II (e.g. assumptions on exchange rates, source of data, etc.)
Which groups of companies will be required to comply with CbC Reporting Legislation in the UAE?
Groups of companies that meet the following criteria should comply with CbC Reporting legislation in the UAE:
- MNE Groups i.e. Groups which consist of two or more enterprises that are residents for tax purposes in different jurisdictions (an enterprise that is resident for tax purposes in one jurisdiction and has a taxable permanent establishment in another jurisdiction should be considered as a separate enterprise in the context of this definition); and
- Have a total consolidated revenue that is equal to or more than AED 3,150,000,000 for the financial year preceding the reporting year concerned.
What currency should be used for CbC Reporting purposes?
If separate entity statutory financial statements are used as the basis for reporting, all amounts should be translated to the stated functional currency of the MNE Group. The average exchange rates for the year should be used for currency conversion. The applied rates should be stated in the Additional Information section (Table III) of the CbC Report.
In which language should the CbC Report be submitted in the UAE?
The CbC Report should be submitted in English.
What is a CbCR notification?
A reporting containing (i) confirmation that the entity is a member of the MNE Group subject to the CbC Reporting requirements and (ii) reference to the identity and tax residence of the Ultimate Parent Entity or another entity within the Group that is responsible for filing the CbC Report on behalf of the MNE Group.
Who is required to submit a CbCR notification in the UAE?
The UAE tax resident entity, which is a member of the MNE Group subject to the CbC Reporting Legislation (notification and/or filing) in the UAE. In case there are more than one UAE tax resident entities which are members of the same MNE Group, one of the UAE tax resident entity can be designated to file the CbCR notification on behalf of all the entities tax resident in the UAE.
What is the deadline for submission of the CbCR notification in the UAE?
CbCR notifications must be submitted no later than the last day of the financial reporting year of the MNE. Accordingly, for the MNE Group’s financial year starting on January 1st 2019, CbCR notification should be submitted in the UAE by no later than December 31st 2019.
For Country by Country Reporting company have to collect data of all business entities of its group from all countries. It is a very time consuming process, specially where organizations operate in a decentralized business model.
For submission of CbC Report Understanding of Laws of different country is required. At RVG our experienced professionals will handle all your burden of preparing CbC reports plus guide you relation to compliance of different countries applicable to your CbC report.