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U.K. CbC Reporting Data Won’t Appear in OECD Statistics Report

Posted on May 29, 2020

The United Kingdom’s aggregated and anonymized country-by-country reporting data for 2016 will not be included in a forthcoming OECD tax publication because of the U.K. government’s concerns about data quality and consistency.

Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, confirmed May 28 that the United Kingdom has not consented to publishing its anonymized and aggregated CbC reporting data as part of the OECD’s Corporate Tax Statistics report, which is now slated for July. U.K. government sources had indicated to Tax Notes May 27 that U.K. data would be excluded from the forthcoming report.

Countries have been collecting CbC reporting data from large multinational corporations under action 13 of the base erosion and profit-shifting project since 2016. Action 13 is one of the four minimum standards that countries must implement in exchange for membership in the inclusive framework on BEPS.

Publication of the data is in line with a key recommendation in the action 11 report (measuring and monitoring BEPS), which called for publication of those statistics to help assess the effectiveness of BEPS project implementation.

Following concerns about multinational enterprises taking potentially inconsistent approaches toward including intragroup dividends receivable within CbC report profits, the inclusive framework issued further guidance addressing the issue in late 2019. That guidance clarified the approach that MNEs should use while preparing their CbC reports in the future.

“However, the issuing of these guidelines was not able to address any data quality issues in CbC [reports] already filed,” Saint-Amans said in a statement emailed to Tax Notes. “On the basis of these concerns and for the first set of data, the United Kingdom has not agreed to the publication of its CbC [reporting] data this year.”

U.K. Financial Secretary to the Treasury Jesse Norman said May 4 that the United Kingdom supports improving tax transparency and the publication of aggregated and anonymized CbC reporting data. However, the U.K. government had raised concerns with the OECD about the distortive effect of including intragroup dividends receivable in CbC reporting profit, given the inconsistent approaches MNEs had taken before the extra guidance was published.

“While this does not compromise the value of country-by-country reports for individual group compliance purposes, it does compromise how representative and comparable the aggregate CbC [reporting] data is for U.K. multinational groups,” Norman wrote in an answer to a parliamentary question.

Because the guidance does not address the data concerns in previously submitted CbC reports, “the government has been clear that it will not consent to publication of aggregated U.K. CbC [reporting] information unless those issues are addressed,” Norman added.

However, the United Kingdom has come under fire from commentators, including the Tax Justice Network, which criticized the government’s “U-turn on tax transparency” since the U.K. government received powers under Finance Act 2016 to make CbC reporting data public.

A few other jurisdictions that have received CbC reports have yet to give aggregated and anonomyized CbC report data to the OECD to publish in 2020, according to Saint-Amans. “For a majority of these jurisdictions, this has been due to the need to maintain taxpayer confidentiality given the fact that these jurisdictions only received a small number of CbC [reports],” he said.

More than 25 jurisdictions have provided the data, which the OECD understands accounts for nearly 80 percent of all CbC reports filed under action 13, according to Saint-Amans.

“The OECD considers that the publication of aggregated CbC [reporting] data is important but should not be misleading and recognizes that this is an incremental process,” Saint-Amans said. “We are working with members of the inclusive framework on BEPS to increase the number of submitting jurisdictions and improve the quality of the data submitted.”

The U.K. government intends to collaborate with the OECD to enhance the quality of its CbC report statistics for other editions of the Corporate Tax Statistics report, according to U.K. government sources.

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