10 (strategic) questions to prepare for CbC reporting

 

As you are probably aware, MNE groups with a consolidated group revenue exceeding EURO 750 million (or local equivalent) need to comply with the Country-by-Country (‘CbC’) reporting requirements. MNEs need to prepare CbC reporting before the end of 2017, or at a later date, dependent on the country.

Although CbC reporting gives rise to quite some unsolved questions, it is here to stay. So you can’t simply take off your virtual reality headset. The preparation of CbC reporting also takes time: based on experience the entire process to complete the 3 CbC reporting tables will probably take you some 2-4 month.

We recommend to address the subject in 2016, enabling you to take any corrective action before the close of 2016, if needed. But even if you postpone the CbC reporting process until 2017, it is worthwhile to discuss the 10 following (strategic) questions:

  1. Who will be accountable for the CbC reporting process (e.g., CFO, head of tax or head of transfer pricing)?
  2. Which departments will be executing the CbC reporting process (e.g., tax department, finance and control department)?
  3. What are the major stakeholders of the CbC reporting (e.g., the board, CFO, CEO, internal or external audit, tax, legal, corporate finance and accounting, local finance, tax authorities)?
  4. Which departments/persons would likely be involved in the process of gathering financial data and preparing the CbC report (e.g., tax department, finance and control department, IT department, local finance staff)?
  5. Are all relevant persons involved in the CbC reporting process made aware of their (upcoming) roles and responsibilities?
  6. What is the priority of the CbC reporting given by management? What is the ambition level of the management, now and in the near future (e.g., meeting compliance regulations or part of corporate social responsibility)?
  7. What would be the goal of the CbC reporting? Would it completion of the CbC XML table, or would it also be meant for internal (to inform the board) and/or external (to inform, e.g., NGOs or shareholders) purposes?
  8. What is the budget that is available to undertake the CbC reporting process? Will the required work have to be (partly) outsourced?
  9. Are your existing financial reporting systems equipped to support the CbC reporting process or do you need to make use of an external software provider?
  10. What would be the assessed time line of the CbC reporting process (also taking into account the reporting cycle and resources available)?

A meeting of, say, half a day between the CFO, head of tax and head of finance (and control) would probably be sufficient to at least provide you with some structure in your CbC reporting process.

If you have any comments or questions, please share your views, comments or questions.

Link to BEPS Action 13 final report, including CbC reporting

 

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