CountrybyCountryReporting

CountrybyCountryReporting, often abbreviated as CbCR, is a tax transparency initiative that requires multinational enterprises (MNEs) to report specific financial and tax information to tax authorities in each jurisdiction where they operate. This reporting aims to provide tax administrations with a clearer understanding of how MNEs allocate their profits and pay taxes globally. The information typically includes revenue, profit before tax, corporate income tax paid and accrued, stated capital, accumulated earnings, number of employees, and tangible assets for each tax jurisdiction.

The concept of CbCR emerged from the Organisation for Economic Co-operation and Development (OECD) as part of its Base Erosion and Profit Shifting (BEPS) project. The primary objective of BEPS Action 13 was to address tax avoidance strategies used by MNEs that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. CbCR is seen as a crucial tool in detecting such practices and ensuring that MNEs pay their fair share of taxes in the countries where economic activities occur and value is created.

The reporting is generally made on an annual basis and is submitted by the ultimate parent entity of an MNE group. This information is then exchanged between tax authorities through bilateral or multilateral agreements. While the primary audience for CbCR data is tax administrations, there is ongoing debate about the extent to which this information should be made public, with proponents arguing for public CbCR to enhance overall corporate accountability and stakeholders' ability to assess MNEs' tax contributions.