OECD MASTER FILE CONCEPT AND CBC REPORTING - INTERNATIONAL DOCUMENTATION REQUIREMENTS - STATUS: 1.4.2019 - RÖDL & PARTNER
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OECD Master File concept and CbC Reporting – Status: 1.4.2019 international documentation requirements
Status:
OECD Master File concept and CbC Reporting –
1.4.2019 international documentation requirements
2
Preamble
Dear Reader,
In the light of the rising pressure from the public and the G20, among other factors,
the OECD has set itself an objective to combat tax planning arrangements that are
solely aimed at tax evasion and profit shifting (Base Erosion and Profit Shifting –
BEPS). Therefore, in April 2013, the OECD published an action plan which provided
for 15 actions outlining which measures should be developed and implemented to
eliminate aggressive tax planning practices.
Four of these actions relate directly to transfer pricing. After the Action 13 Final
Report („transfer pricing documentation and Country-by-Country Reporting“)
was released by the OECD in 2015, a three-tiered transfer pricing documentation
approach consisting of the Master File, Local File and Country-by-Country-
Reporting has been included in the new OECD TP Guidelines dated July 2017.
As regards national implementation, Action 13 may well be considered as the BEPS
measure for which States have so far adopted the most extensive legislation. Many
legislators have decided whether to adopt the OECD proposal either in full or at
least in part, or whether to fully reject the new concept.
The necessary framework conditions have been largely created for the automatic
exchange of Country-by-Country (CbC) reports. Thus, as of 24th January 2019,
already 77 countries signed the „Multilateral Competent Authority Agreement on
the Exchange of Country-by-Country Reports“ (CbC MCAA) developed to implement
the international mechanism of the automatic exchange of the CbC Reports.
The consistent and efficient implementation of the three-tiered documentation
approach is considered to be of utmost importance not only by the OECD.
Harmonised documentation regulations help corporate groups reduce also the
compliance costs. Although the elements of the Master File, Local File and CbC
Reporting were developed in a joint effort of many countries, the initial euphoria
over the anticipated introduction of an internationally harmonised concept has
meanwhile faded over signs of a heterogeneous implementation. In addition to still
existing certain formal differences regarding the documentation, there are also
content-related differences and differences with respect to the local preparation,
notification and submission deadlines.
3
An implementation of a documentation concept in corporate groups which
would be fully compliant with BEPS is therefore possible only to a limited
extent. The knowledge of the respective national implementation status
is an essential compliance task for the transfer pricing management
team, especially in order to avoid formal errors and thus the possibility of
questioning the usability of the documentation.
It is hardly surprising that the process of determining individual reporting
obligations binding on internationally operating groups will itself take a
lot of effort and give rise to uncertainty. The aim of this publication on
58 countries is to offer you initial guidance. Although this does not allow
making any conclusive statements about the individual documentation
obligations of your company, we believe that it will offer you a helpful
initial overview.
Yours faithfully
Michael Scharf
4
Contents
BEPS Action 13 7
Service Portfolio 9
Your added value 10
BEPS Action 13 state of implementation
in selected countries 12
Implementation BEPS Action 13 13
Argentina 13
Australia 14
Austria 15
Belarus 16
Belgium 17
Brazil 18
Bulgaria 19
Cambodia20
China21
Croatia 22
Cyprus 23
Czech Republic 24
Denmark 25
Egypt 26
Estonia 27
Finland28
France 29
Georgia 30
Germany31
Hong Kong 32
Hungary33
India 34
Indonesia 35
Ireland 36
Israel 37
Italy 38
Japan 39
Kazakhstan 40
5
Kenya 41
Latvia42
Liechtenstein 43
Lithuania 44
Malaysia45
Mauritius 46
Mexico 47
Moldova 48
Netherlands49
Nigeria50
Philippines51
Poland52
Portugal53
Romania54
Russia55
Serbia 56
Singapore 57
Slovakia 58
South Africa 59
Spain 60
Sweden 61
Switzerland 62
Thailand 63
Tunisia 64
Turkey 65
Ukraine 66
United Arab Emirates 67
United Kingdom 68
USA 69
Vietnam 70
Country-by-Country-Reporting 71
Notification to the tax administration 71
Countries that signed the MCAA on CbCR 74
Rödl & Partner 75
About us 75
Rödl & Partner worldwide 76
Contact 77
6
BEPS Action 13
Transfer pricing documentation and Country-
by-Country Reporting
Following the points of action developed in the context of the BEPS project
against Base Erosion and Profit Shifting of multinational enterprises, countries
shall implement these actions via changes in domestic law and practices and via
treaty provisions in order to protect their respective national tax bases. The BEPS
Action Point 13 („2015 Final Report – transfer pricing documentation and Country-
by-Country Reporting“) provides guidance for tax administrations to improve
transparency by developing rules and procedures on sufficient documentation
in connection with risk assessment and transfer pricing inquiry. The proposed
standardized three-tiered approach to transfer pricing documentation for
Multinational Enterprise (MNE) groups has replaced the former Chapter 5 of the
OECD Transfer Pricing Guidelines in July 2017 and should consist of the following:
(i) a Master File, (ii) a Local File, and (iii) Country-by-Country Reporting (CbCR).
three-tiered approach
Master File CbC Reporting Local File
(„high-level („high-level risk („specific IC
overview“) assessment“) transactions“)
transfer pricing
Risk assessment analysis
The Master File contains standardized information relevant for all MNE group
members and should provide a general overview of the MNE group business,
placing the MNE group‘s pricing practices in their global economic, legal, financial
and tax contexts. Compared to already existing Master File concepts or that existed
previously, the chapters on intangible assets and financing in particular are new.
In contrast to the Master File the Local File provides more detailed information
relating to specific intercompany transactions for the respective domestic taxpayer
to which the Local File applies.
The third component of the three-tiered approach is CbC Reporting
which is generally compiled only by MNE groups with annual consolidated group
revenue equal to or exceeding EUR 750 million. CbC Reporting requires aggregate
tax jurisdiction-wide information related to the global allocation of income, taxes
paid, and certain indicators of the location of economic activity among the tax
jurisdictions in which the MNE group operates. The Master File and CbC Reporting
will be helpful for risk assessment purposes. However, the Local File comprises
information relevant to a detailed transfer pricing analysis for the relevant taxing
authority for each country in which the MNE group is situated.
7
DATE? DATE? DATE?
LOCAL FILE MASTER FILE –– Duty
of documentation for all FY
E.g. with annual tax Update (if necessary) Ultimate parent following 1 January 2016
CbC
declaration with the annual tax company –– Usually declaration within 12 months
Reporting
declaration after the lastday of the Reporting
Fiscal Year of the MNE group
Master File
Local File Tax administration
Automatic Information exchange
Constituent Entity Constituent Entity Constituent Entity
Master File Master File Master File
Local File Tax administration Local File Tax administration Local File Tax administration
The anticipated flow of information between the members of a MNE group and the taxing authorities.
In practice, the ultimate parent company is required to prepare the
Master File and will share it with the constituent entities in order to comply with the
documentation requirements. The ultimate parent company has access to all essential
tax information. Depending on the existing intercompany transactions, the individual
country specific Local Files can be filed centrally by the ultimate parent company or
can be independently filed by the local companies. The more interlinked and versatile
the intercompany transactions between the individual associated enterprises are, the
less the centralization of information filing will be feasible. In general, each ultimate
parent company of a MNE group is obligated to file a CbC Report in the country where
it is resident for tax purposes. The OECD concept includes an annual exchange of
information received from the reporting entities that is a resident for tax purposes
in its jurisdiction with all other competent authorities of jurisdictions with respect to
which it has an agreement in effect, and in which, on the basis of the information in
the CbC Report, one or more constituent entities of the MNE group of the reporting
entity are either a resident for tax purposes, or are subject to tax with respect to the
business carried out through a permanent establishment.
Many countries have already implemented or made initial arrangements
to implement BEPS Action Point 13 in domestic law. An implementation will provide
taxing authorities with useful information to assess transfer pricing risks and make
determinations about where audit resources can most effectively be deployed.
Taxpayers are encouraged to articulate convincing, consistent and cogent transfer
pricing positions in order to be positioned to face what will inevitably be a more
thorough risk assessment and audit process by their respective taxing authorities.
8
Service Portfolio
Rödl & Partner’s transfer pricing service line supports its international clients
worldwide in the individual structuring, documentation and defence of cross-border
business relationships within the group of companies. We work together, closely
interlinked across all service lines. We think from a market perspective, where a tax
team possesses all the capabilities to be successful and to realise the client’s goals.
Rödl & Partner has many years of experience in supporting multinational enterprise
groups in the area of transfer pricing. Together with our colleagues in over 50
countries, we can advise you in the following areas, also based on cross-border
collaboration, if required:
Health Check Digital Documentation CbCR
Solutions
–– IC Maturity Check –– Master File –– Data generation
–– Optimisation –– Transaction matrix –– Local Files –– Data preparation
potential –– Segmentation –– Global –– Report generation
–– Tax risk assessment –– TP Controlling coordination –– Conversion to XML
–– System design –– Simulation format
–– Interface design –– ERP-Integration –– Transfer
–– BI / Analytics –– CbCR risk analysis
–– Digital agenda
Arm‘s length Operational TP Defence TP Legal TP
comparison
–– Selection of the type –– SWOT analysis –– Tax audit –– Procedural law
and scope of arm‘s –– Process recording –– Joint Audit –– Duties to cooperate
length transactions –– Roadmap to –– Mutual agreement –– Reporting
–– Benchmarking excellence procedure requirements
–– Rating –– Best Practice –– APA –– Burden of proof
–– Valuation Workshops –– Objection –– Usability
–– Adjustment –– Coaching procedure –– Access rights
calculations –– Lawsuit concerning tax
audit
–– Data protection
9
Your added value
Rödl & Partner offers you an approach that
can be briefly summarised as follows:
–– “One Face To The Client” approach – you have ONE contact person
–– Professional assistance for German companies with foreign engagements
–– Central project management: Our structure – international, interdisciplinary
–– Specialists with local expertise – no ‘fly-in’ consultants
Thus, Rödl & Partner offers you the following
added value:
–– Your consultant speaks your language anywhere in the world – also in a figurative sense
–– Regular advice offered by a team of consultants and a direct point of contact
–– One-stop-shop concept – coordination of service providers that saves you time
–– Immediate and direct access to the best local experts, without language and time
barriers
–– You get an easy, consistent, cost-efficient and transparent overview of your projects
worldwide
–– You receive directly usable information firsthand
–– We offer you international hands-on solutions
10BEPS Action 13 state
of implementation in
selected countries
WORLD
Argentina
Australia
Brazil
Cambodia
China
Egypt
Europe
Georgia
Hong Kong
India
Indonesia
Israel
Japan
Kazakhstan
Kenya
Malaysia
Mauritius
Mexico
Nigeria
Phillippines
Russia
Singapore
South Africa
Thailand
Tunesien
United Arab Emirates
USA
Vietnam
Implemented
Partially implemented
Implementation expected
No implementation
11BEPS Action 13 state
of implementation in
selected countries
EUROPA
Austria
Belarus
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Ireland
Italy
Latvia
Liechtenstein
Lithuania
Moldova
Netherlands
Poland
Portugal
Romania
Slovakia
Serbia
Spain
Sweden
Switzerland
Turkey
Ukraine
United Kingdom
Implemented
Partially implemented
Implementation expected
No implementation
12Implementation BEPS Action 13
ARGENTINA
Master File Local File CbCR
–– The Master File concept according to BEPS Action 13 has not been –– The CbCR according to BEPS
implemented, but is expected. Action 13 has been implemented
for FYs starting from 2017.
–– On 27 December 2018, a National –– In Argentina, a Local File (called TP –– Preparation and submission
Decree was enacted that will allow Report) has been in place since the deadline: Submission within 12
the tax authorities to require a fiscal year 1999. months after the end of the fiscal
Master File. –– Although it is not completely in year.
–– The tax authorities have not yet line with BEPS 13, it contains - to a –– Threshold: Consolidated revenue
issued any resolution to exercise certain extent - similar information. of at least EUR 750 million in the
this right. –– Local documentation requirements: previous year.
–– Thresholds: Transactions with –– Language: Spanish.
the total volume exceeding the –– Surrogate Filing: Has been
amount of ARS 3,000,000 or implemented.
the amount of the individual –– Secondary Filing: Has been
transaction of ARS 300,000. implemented.
–– Submission deadline: Local –– Duty of notification: Within 3
documentation must be filed months after the end of the
within 14 days of the beginning fiscal year on the website of
of the eighth month following the the Argentinian tax authority. In
fiscal year. addition, a secondary notification
–– Duty of notification: Not must be filed within 2 months of
applicable. the CbCR submission deadline,
–– Penalties: Up to ARS 20,000 which must contain a specific
for non-compliance with the date of submission by a foreign
submission deadline. entity.
–– Also informative returns regarding –– Penalties:
transactions with related and –– A fine ranging between ARS
unrelated foreign entities must be 80,000 and ARS 200,000 for
filed. failure to notify;
–– Penalties: –– In the case of failure to
–– Non-submission of submit, the fine ranges
information regarding between ARS 600,000 and
transactions with foreign ARS 900,000.
related entities will result in –– In addition, taxpayers will be
a fine of ARS 10,000 (ARS subject to further sanctions:
20,000 for foreign-owned –– Increased risk of tax audits
taxpayers). in the future;
–– Non-submission of information –– Suspension or exclusion
regarding imports and exports from specific tax registers;
with unrelated entities will and
result in a fine of ARS 1,500 –– Suspension from the
(ARS 9,000 for foreign-owned applications to obtain
taxpayers). non-withholding
certificates.
–– Argentina is a signatory of
Multilateral Competent Authority
Agreement on the Exchange of
CbCR (the ”CbC MCAA”).
–– A TXT format similar to the
OECD‘s XML format has been
implemented.
Effective in Law for fiscal years as from Effective in Law for fiscal years as
1 January 1999 from 1 January 2017
13Implementation BEPS Action 13
AUSTRALIA
Master File Local File CbCR
–– The Master File concept according –– Local File must be lodged in a –– The CbCR according to BEPS
to BEPS Action 13 has been prescribed electronic format Action 13 has been implemented
incorporated in the domestic which is unique to Australia. There for FYs starting from 2016.
legislation. is a “short form” for companies –– Language: Only in English.
–– An SGE (significant global entity) is which are characterised as small –– Surrogate Filing: Has been
required to provide the Australian in Australia and have certain implemented.
Taxation Office (ATO) with an attributes. –– Secondary Filing: Has been
English version of the Master File –– Local File requirements exist in implemented.
prepared by the global parent entity. addition to the local Transfer Pricing –– Duty of notification: An entity
–– Exemptions are possible in limited Documentation requirements is required to notify of its SGE
cases only (e.g. for the first year if in Australia, although there is a status in the annual company tax
the foreign parent is in a jurisdiction Simplified Transfer Pricing Record return (as a rule, 6.5 months after
which has not yet adopted the Keeping Option available for specific the year-end).
Master File concept). Exemptions small local entities. –– Australia is a signatory of the
must be applied for and are not –– Also, there is a requirement for Multilateral Competent Authority
automatic. an SGE to lodge general purpose Agreement on the Exchange of
financial statements with the ATO CbCR (the ”CbC MCAA”).
at the time of lodging the annual –– OECD‘s XML format for
company tax return unless they submission has been
have already been lodged with the implemented.
corporate regulator.
–– Requirements / thresholds:
–– Entity qualifies as an “Significant Global Entity“ (SGE), if it is a member of a consolidated group of entities.
–– The group generated annual global income exceeding AUD 1 billon in the previous year.
–– Preparation and submission deadline: Within 12 months after the end of the FY.
–– Penalties:
–– Failure to file on time results in penalties ranging up to AUD 525,000 per filing obligation.
–– False or misleading statements can be fined up to 150 % of the tax shortfall, or in the case of no shortfall with a
penalty of AUD 25,200. The penalty may be reduced if reasonable argumentation is presented. A penalty reduction
arising out of transfer pricing adjustments may be applied, if local Transfer Pricing Documentation requirements
must be met before the annual tax return is filed.
Effective in Law for fiscal years as from 1 January 2016
14Implementation BEPS Action 13
AUSTRIA
Master File Local File CbCR
–– The Master File concept according to BEPS Action 13 has been incorporated in –– The CbCR according to BEPS
the domestic legislation. Action 13 has been implemented
–– Requirements / thresholds: for FYs starting from 2016.
–– An Austrian entity is part of a MNE group; and –– Threshold: Annual consolidated
–– Its revenue exceeded the amount of EUR 50 million in each of the two group revenue of at least EUR 750
preceding years. million in the previous year.
–– No Master File and Local File must be prepared as from the following fiscal –– Preparation and submission
year if the revenue does not exceed EUR 50 million in two consecutive years. deadline: No later than 12 months
–– Duty of notification and deadline for the preparation: No fixed deadline. The after the end of the fiscal year.
tax authorities may request submission of the Master File and the Local File –– Surrogate filing: Has been
following the submission of the tax return. implemented.
–– If the revenue of the Austrian entity is below the threshold, tax authorities may –– Secondary filing: Has been
request submission of the Master File if another group entity had to prepare the implemented.
Master File according to the law of another state. –– Duty of notification: By the end
–– Submission deadline: Upon request, within 30 days. of the fiscal year; (form VPDG
–– Language: German or English 1, per mail or electronically via
–– Penalties: Up to EUR 5,000 for non-compliance. FinanzOnline).
–– Also if the revenue is below the threshold, the Transfer Pricing Documentation –– Penalties: Up to EUR 50,000.
must be prepared based on the general recording and cooperation obligations of –– Austria is a signatory of the
the taxpayer (§§ 124, 131 and 138 BAO). Multilateral Competent Authority
Agreement on the Exchange of
CbCR (the ”CbC MCAA”).
–– OECD‘s XML format for
submission has been
implemented.
Effective in Law for fiscal years as from 1 January 2016
15Implementation BEPS Action 13
BELARUS
Master File Local File CbCR
–– T he Master File concept has not been implemented. In this context, the actual –– The CbCR according to
Master File concept does not contravene the local legislation and is largely BEPS Action 13 has not been
accepted. implemented yet.
–– Local documentation requirements: –– It is expected that the
–– A documentation requirement applies to the ”large” taxpayers with the implementation of CbCR in
transaction volume of more than BYN 2 million (about EUR 800,000) per year; Russia will accelerate the process
or in Belarus.
–– Other taxpayers who are involved in the transactions with „strategic“ goods
(defined by law) in the same volume (EUR 800,000 p.a.). The documentation
must be prepared after the end of the tax year and submitted upon a request.
The documentation may be requested by the tax authorities at any time
starting from 1 July of the following year.
–– In the following cases a short version of the documentation (“Short
documentation”) must be submitted upon request (early preparation is not
required):
–– Acquisition or sale of goods or services by or to an offshore entity, or
an affiliated foreign-based entity or an affiliated entity, which is tax-
exempt in Belarus, with the transaction volume exceeding BYN 400,000
(approximately EUR 160,000) within a calendar year; or
–– Real estate transactions (regardless of the transaction volume). The
Short documentation shall be provided upon request within the time limit
specified by the tax authority (as a rule – 10 working days).
–– Penalties: No sanctions are imposed for the missing documentation, but the
tax authority may, on the basis of its own calculation, request the additional
payment of corporate income tax.
–– Requirements to the content and form of the documentation / Short documentation:
–– According to the latest amendments to the Belarusian Tax Code, which have
been introduced since 01.01.2019, the documentation / Short documentation
must be prepared in accordance with the statutory sample, but the
submission of any additional information is explicitly permitted.
–– The announced comprehensive template for documentation / Short
documentation is one-tier document (no differentiation between Master and
Local File, no CbCR).
–– Language: Russian
16Implementation BEPS Action 13
BELGIUM
Master File Local File CbCR
–– The Master File concept according –– Requirements / thresholds: The same –– The CbCR according to BEPS
to BEPS Action 13 has been requirements as in the case of the Action 13 has been implemented
incorporated in the domestic Master File. for FYs starting from 2016.
legislation. –– Submission deadline: The Local –– Threshold: A MNE group must
–– Requirements / thresholds: A Master File must be filed by the same file the CbCR if it has generated a
File must be filed if the Belgian submission deadline as the consolidated revenue of EUR 750
constituent entity exceeds one of corporate income tax return of the million in the last year.
the following criteria for the last Belgian constituent entity relating to –– Submission deadline: Within
fiscal year: the reporting period. (Please note: 12 months after the end of the
–– Total operating and financial the corporate income tax return reporting period of the MNE group.
revenue of more than EUR 50 and the Local File cannot be filed –– Language: The CbCR may be
million per Belgian constituent via the same portal - the corporate submitted also in English.
entity (excl. non-recurring income tax return must be filed –– Surrogate filing: Has been
revenue); or via BizTax and the Local File - via implemented.
–– Balance sheet total of more MyMinFinPro) –– Secondary filing: Has been
than EUR 1 billion per Belgian –– Language: The Local File may be implemented.
constituent entity; or submitted also in English. –– Duty of notification: The
–– Annual average of more than 100 –– Penalties: Non-compliance with the notification form must be filed by
fulltime equivalents (employees) submission deadline can result in the end of the reporting period of
per Belgian constituent entity. a fine ranging between EUR 1,250 the MNE group.
–– Preparation and submission and EUR 25,000 for each further –– Penalties: Non-compliance with
deadline: Within 12 months after the violation. the submission deadlines can
end of the fiscal year of the MNE –– The Local File consists of 3 parts: A, result in a fine ranging between
group. B and C. Part A must always be filed EUR 1,250 and EUR 25,000, for
–– Language: The Master File may be if the Local File is required. Part B each further violation.
submitted also in English. must be filed only in case that at –– Belgium is a signatory of the
–– Penalties: Non-compliance with the least one of the business units of the Multilateral Competent Authority
submission deadline can result in Belgian entity has executed cross- Agreement on the Exchange of
a fine ranging between EUR 1,250 border intra-group transactions of CbCR (the ”CbC MCAA”).
and EUR 25,000 for each further more than EUR 1,000,000. In such –– OECD‘s XML format for submission
violation. a case Part B must be completed has been implemented.
–– XML-Format for submission has for each business unit that has
been implemented. exceeded this threshold.
–– Part C is optional and can be used
for filing appendices.
–– XML-Format for submission has
been implemented.
Effective in Law for fiscal years as from Part A & C are effective in Law for Effective in Law for fiscal years as
1 January 2016 fiscal years as from 1 January 2016 from 1 January 2016
Part B as from 1 January 2017
17Implementation BEPS Action 13
BRAZIL
Master File Local File CbCR
–– T
he Master File concept according to BEPS Action 13 has not been implemented yet. –– The CbCR according to BEPS
–– Local documentation requirements: Action 13 has been implemented
–– Obligation to prepare documentation: Pursuant to the Law No. 9.430 / 96 for FYs starting from 2016.
and the Normative Instruction #1312 / 2012, intercompany transactions (e.g. –– Threshold:
supply of goods, provision of services, transfer of rights or loans) are subject –– Enterprises with total
to domestic transfer pricing rules. Brazilian companies electing the Presumed consolidated revenue of more
Profit Method to assess their corporate income tax are exempt from the than BRL 2.26 billion in the
obligation to perform the calculation of import transactions. previous fiscal year, if the
–– Submission deadlines: The documentation does not need to be submitted, parent company is resident in
but the calculation must be prepared until the last business day of July of the Brazil; or
following calendar year (the documentation must be kept on file for 5 years). –– Consolidated revenue of more
The calculation should be performed on a yearly basis to assess whether any than EUR 750 million in the
adjustment to the corporate income tax base should be made on an item-by- previous fiscal year if the
item basis, irrespective of the value of intercompany transactions. Safe harbour parent company is resident
applies only to export transactions, provided that specific criteria are met. abroad.
–– Duty of notification: No notification obligation regarding preparation of –– Submission deadline: Currently,
documentation; Calculated fiscal adjustments must be disclosed in the the CbCR shall be disclosed
Corporate Income Tax Return for the following year (last business day of July). annually using a Module (Bloco W)
–– English documentations are not accepted. of the Brazilian Annual Corporate
–– Penalties for non-compliance: Non-deductibility of expenses, if applicable, Income Tax Return (”ECF”) no
adjustment of the corporate income tax base and of the amount of tax due later than by the last business day
in the period, plus financial penalties and interest for submitting inaccurate of July each year.
information. –– Language: Portuguese, English or
Spanish.
–– Surrogate filing: Has been
implemented.
–– Secondary filing: Has been
implemented.
–– Duty of notification: As part of
the Annual Corporate Income Tax
Return; In the same electronic
format as the CbCR and at the
same time, i.e. by the last business
day of July each year.
–– Penalties:
–– Provision of incomplete or
inaccurate information on
transactions and financial
operations in CbCR may result
in a penalty of up to 3 % of the
transaction value.
–– Failure to file the CbCR is
subject to a penalty ranging
between BRL 500 and BRL
1,500 on a monthly basis.
–– Brazil is a signatory of the
Multilateral Competent Authority
Agreement on the Exchange of
CbCR (the ”CbC MCAA”).
–– OECD‘s XML format for submission
has been implemented.
Effective in Law for fiscal years as
from 1 January 2016
18Implementation BEPS Action 13
BULGARIA
Master File Local File CbCR
–– The Master File concept according to BEPS Action 13 has not been implemented yet. –– Effective for the fiscal years
–– Local documentation requirements: starting from 2016, if the CbCR is
–– There are no legally prescribed obligations regarding preparation of the filed by the ultimate parent entity
Transfer Pricing Documentation. However, any transactions with related or for the fiscal years starting
parties have to be declared in the annual tax return and disclosed in the from 2017, if the CbCR is filed
annual financial statements. by the constituent entity.
–– Thresholds: According to the Transfer Pricing Guidelines issued by the –– Threshold:
Bulgarian tax authorities, it should be assessed on a case by case basis –– Ultimate parent entity of
whether a detailed Transfer Pricing Documentation is required. As a rule, it is the group is a tax resident
not necessary for transactions with related entities which do not exceed the in Bulgaria and the annual
following thresholds: consolidated group revenue
–– BGN 200,000 for transactions in goods and services; is at least BGN 100 million
–– BGN 400,000 for transactions in intangible assets and interests under (approx. EUR 51 million) for
loan agreements. the fiscal year preceding the
–– Submission deadline: In the case of a tax audit, the deadline is determined by the reporting year; or
tax authority (usually 7 or 14 days). If requested documents and / or declarations –– Ultimate parent entity of the
are not submitted on time, the tax authorities may impose a financial penalty. The group is not a tax resident
term may be prolonged or temporarily suspended under certain circumstances. in Bulgaria and the annual
–– Duty of notification: No consolidated group revenue is
–– Language: Bulgarian at least BGN 1,466 million (EUR
–– Penalties for non-compliance: A financial penalty between BGN 250 and BGN 750 million) for the fiscal year
500 will be imposed, if the taxpayer refuses to cooperate with the tax authorities preceding the reporting year.
or prevents auditors from exercising their powers. In the case of repeated –– Submission deadline: Within
violation, a financial penalty ranges between BGN 500 and BGN 1,000. 12 months after the end of the
reporting fiscal year.
–– Language: Bulgarian
–– Surrogate filing: Has been
implemented.
–– Secondary filing: Has been
implemented.
–– Duty of notification: In the
electronic format through the
website of the NRA by the end
of the reporting fiscal year.
Information about the status
regarding the CbCR within the
MNE group and about which
entity is required to file the CbCR
should be disclosed.
–– Penalties:
–– Failure to submit the report
results in a penalty ranging
between BGN 100.000 and
BGN 200,000;
–– Submission of incomplete
or incorrect data results in a
penalty ranging between BGN
50.000 and BGN 150,000);
–– A violation of the notification
obligation results in a penalty
ranging between BGN 50.000
and BGN 150,000).
–– Bulgaria is a signatory of the
Multilateral Competent Authority
Agreement on the Exchange of
CbCR (the ”CbC MCAA”).
–– OECD‘s XML format for submission
has not been implemented.
The report is submitted via an
electronic programme which is
available on the NRA website.
Effective in Law for fiscal years as
from 1 January 2016 or 1 January 2017
19Implementation BEPS Action 13
CAMBODIA
Master File Local File CbCR
–– The Master File concept according to BEPS Action 13 has not been implemented –– The CbCR according to
yet. The Ministry of Economy and Finance issued Prakas No. 986 which is based BEPS Action 13 has not been
on the OECD Transfer Pricing Guidelines. implemented yet.
–– The Prakas definition of related parties corresponds with the Law on Taxation, –– Cambodia is not a signatory
according to which enterprises are related if: of the Multilateral Competent
–– They are members of the same group of enterprises; or Authority Agreement on the
–– An enterprise controls another enterprise (i.e. participation of at least 20 %); Exchange of CbCR (the “CbC
or MCAA”).
–– An enterprise is controlled by another enterprise; or
–– Enterprises are under common control of a third party.
–– Thresholds: No
–– Deadline for the preparation: The same as the due date for filing tax returns; i.e.
within 3 months after the fiscal year-end.
–– Submission deadline: Upon request by the Cambodian tax authority; a specific
submission deadline is determined on a case-by-case basis.
–– Duty of notification: Taxpayer must disclose related-party transactions when
filing tax returns.
–– Language: Khmer or English
–– Penalties: Failure to comply with the TP regulations may result in:
–– Revocation of the company’s certificate of conformity;
–– A financial penalty ranges between 10 % and 40 % of back taxes;
–– A criminal complaint is lodged against a taxpayer;
–– Interest charge of 2 % on back taxes due to adjustment to the arm’s length
pricing.
Effective in Law for fiscal years as from 10 October 2017
20Implementation BEPS Action 13
CHINA
Master File Local File CbCR
–– The Master File concept according –– The Local File concept has been –– The CbCR according to BEPS
to BEPS Action 13 has been adjusted to the BEPS Action 13 in Action 13 has been implemented
incorporated in the domestic 2016. for FYs starting from 2016.
legislation. –– Thresholds: –– Requirements / thresholds:
–– Requirements / thresholds: –– In the case of transfers of –– Ultimate parent entity of a
–– The enterprise makes cross- tangible assets exceeding the MNE group is a tax resident
border transactions with related amount of CNY 200 million in China and the group
parties and the group, which the between related companies; or has generated an annual
enterprise is a part of, has already –– In the case of transfers of consolidated group revenue of
prepared a Master File; or financial assets or transfers of more than CNY 5,5 billion; or
–– The total amount of related-party ownership of intangible assets –– A Chinese entity has been
transactions exceeds CNY 1 exceeding the amount of CNY commissioned by the MNE
billion. 100 million between related group to prepare the CbCR
–– Deadline for the preparation: Within parties; or (preparation of the CbCR is
12 months after the fiscal year end –– All other related party governed by the domestic tax
of the group’s ultimate holding transactions exceeding the law of the ultimate parent
company. amount of CNY 40 million in entity).
–– Submission deadline: Within 30 days total (e.g. interests on –– Submission deadline: May 31 of
upon request of tax authorities. intercompany loans). the following year together with
–– As compared to BEPS Action 13, –– Deadline for the preparation: June the annual CIT return.
additional information is required 30 of the following fiscal year. –– Language: Chinese and English
for the Master File in China. –– Submission deadline: Upon request –– Surrogate filing: Has been
–– Duty of notification: It should be of tax authorities within 30 days. implemented.
indicated in the annual corporate –– As compared to BEPS Action 13, –– Secondary filing: Has been
income tax (CIT) return whether the additional information is required for implemented.
company is obliged to prepare the the Local File in China. –– Duty of notification: Along with
Master File for the year. –– Duty of notification: It should be the form for reporting of related
–– Language: Chinese indicated in the annual CIT return party transactions.
–– Penalties: Non-compliance (CNY whether the company is obliged to –– Penalties: CNY 10,000 – CNY
10,000), if requirements are not met. prepare the Local File for the year. 50,000
–– Language: Chinese –– China is a signatory of the
–– Penalties: Non-compliance (CNY Multilateral Competent Authority
10,000), if requirements are not met. Agreement on the Exchange of
CbCR (the ”CbC MCAA”).
–– OECD‘s XML format for
submission has been
implemented.
Effective in Law for fiscal years as from 1 January 2016
21Implementation BEPS Action 13
CROATIA
Master File Local File CbCR
–– The incorporation of the Master File concept according to BEPS Action 13 into –– The CbCR according to BEPS
domestic legislation is expected. The Croatian tax authority (CTA) has not issued Action 13 has been implemented
any guidelines on the implementation of the Master File concept yet. for FYs starting from 2016.
–– The Local File has not been implemented as such, but the local requirements are –– Threshold: MNEs headquartered
similar to the OECD TP Guidelines. in Croatia with a total
–– Local documentation requirements: consolidated group turnover of at
–– Thresholds: No thresholds have been prescribed by the CTA concerning least EUR 750 million in the last
Transfer Pricing Documentation. fiscal year.
–– Deadline for the preparation: No deadline for preparing the Transfer Pricing –– Submission deadline: Within 12
Documentation has been prescribed by law. However, the law requires the months after the end of the fiscal
Transfer Pricing Documentation to be available and provided to the tax year for which the report was
authorities upon their request as part of a tax audit. submitted.
–– Submission deadline: In practice, taxpayers have 30 to 45 days to submit their –– Language: Croatian
TP documentation after receiving a request from the tax authority. –– Surrogate filing: Has been
–– Duty of notification: There are no notification requirements. Some medium and implemented.
large entities must provide information about the methods applied, if requested –– Secondary filing: Has been
by the CTA. implemented.
–– Language: Croatian –– Duty of notification: Within 4
–– Penalties: Fines of up to HRK 200,000 (approximately EUR 27,000) may be months after the end of the fiscal
imposed on a company and up to HRK 20,000 (approximately EUR 2,700) on year. After the first notification
the responsible individual within the company for every underestimation of the (e.g. for FY17), a company is
corporate income tax liability. no longer obliged to submit
–– Penalty interest will also be calculated starting from the date on which the tax further notifications to Tax
was due. Administration as long as the
identity and tax residence of the
entity submitting the CbCR on
behalf of the group of companies
do not change.
–– Penalties: From EUR 270 to EUR
27,000.
–– Croatia is a signatory of the
Multilateral Competent Authority
Agreement on the Exchange of
CbCR (the ”CbC MCAA”).
–– OECD‘s XML format for
submission of CbCR has been
implemented.
Effective in Law for fiscal years as
from 1 January 2016
22Implementation BEPS Action 13
CYPRUS
Master File Local File CbCR
–– The Master File concept according to BEPS Action 13 has not been implemented yet. –– The CbCR according to BEPS
–– The tax authorities have not yet issued any guidance on the implementation of Action 13 has been implemented
the Master File and the Local File. However, it is expected that the OECD TP for FYs starting from 2016.
Guidelines will have been adopted by the tax authorities by 2019. –– Threshold: Annual consolidated
–– No local documentation requirements are in place. group revenue exceeding EUR
750 million in the previous year.
–– Submission deadline: Within
12 months after the end of the
reporting fiscal year.
–– Language: English
–– Surrogate filing: Has been
implemented.
–– Secondary filing: Has been
implemented. Effective in law for
fiscal years from 2017 onwards.
–– Duty of notification: The CbCR
should be submitted by the end
of each fiscal year. Submission is
made by electronic means.
–– Penalties:
–– Penalties not exceeding EUR
10,000 will apply in case of
non-compliance with the
CbCR Reporting obligations.
–– Penalties not exceeding EUR
5,000 will apply in case of
failure to file a notification.
–– Penalties not exceeding
EUR 1,500 will apply in case
of non-compliance with
obligation to keep all the
necessary books, documents
and records.
–– Cyprus is a signatory of the
Multilateral Competent Authority
Agreement on the Exchange of
CbCR (the ”CbC MCAA”).
–– OECD‘s XML format for submission
has been implemented.
Effective in Law for fiscal years as
from 1 January 2016
23Implementation BEPS Action 13
CZECH
REPUBLIC
Master File Local File CbCR
–– The Master File concept has not been implemented yet. However, it is –– The CbCR according to BEPS
recommended by the tax authorities to follow the OECD TP Guidelines with Action 13 has been implemented
regards to the Master File and the Local File. for FYs starting from 2016.
–– Master File and Local File are typically requested by the tax authorities during –– Threshold: Annual consolidated
external tax audits. group revenue exceeding EUR
–– Language: In practice, the Master File is usually accepted in English or German, 750 million in the previous year.
but according to the law it should be prepared in Czech. The Local File is accepted –– Submission deadline: Within
only in the Czech language. 12 months after the end of the
–– Starting from the assessment period 2014, the volume of all cross-border reporting fiscal year.
intercompany transactions must be notified as an appendix to the corporate –– Surrogate filing: Has been
income tax return (except PEs). The deadline for such notification is 3 or 6 months implemented.
of the end of the tax period. –– Secondary filing: Has been
implemented.
–– Duty of notification: In the
case of first-time reporting, the
deadline is generally by the
end of the reporting fiscal year.
Afterwards, only changes need to
be reported (within 15 days of the
reportable event).
–– Penalties: Up to CZK 1.5 million.
–– Czech Republic is a signatory
of the Multilateral Competent
Authority Agreement on the
Exchange of CbCR (the ”CbC
MCAA”).
–– The OECD‘s XML format
for submission has been
implemented.
Effective in Law for fiscal years as
from 1 January 2016
24Implementation BEPS Action 13
DENMARK
Master File Local File CbCR
–– The Master File concept according to BEPS Action 13 has been incorporated in –– The CbCR according to BEPS
the domestic legislation. Action 13 has been implemented
–– Requirements / thresholds: for FYs starting from 2016.
–– A group employs more than 250 employees (FTE). –– Threshold: Group revenue of at
–– A group employs less than 250 employees (FTE), but its revenue exceeds DKK least EUR 750 million (DKK 5.6
250 million or the group’s profit is more than DKK 125 million. Otherwise, the billion) in the previous fiscal year.
group is exempted from the obligation to prepare full documentation. –– Submission deadline: 12 months
–– Entities performing transactions with group companies within non-DTA after the last day of the fiscal year
countries or countries outside the EU or the EEC are always required to for which the CbCR is prepared.
prepare documentation for those controlled transactions, regardless of the –– Surrogate filing: Has been
transaction volume. implemented since the fiscal
–– Duty of notification and deadline for the preparation: The TP documentation has year 2017.
to be prepared not later than the deadline for filing the tax return for the fiscal –– Secondary filing: Has been
year, i.e. 30 June 2019 for a company with the calendar year (01.01.-31.12.2018) implemented since the fiscal
as the fiscal year. However, there is no filing requirement. The documentation is year 2017.
submitted only upon request by the tax authorities. –– Duty of notification: A Danish
–– Submission deadline: The submission deadline is 60 days, i.e. 2 months, after group entity is required to inform
receiving a request from the Danish tax authorities. There is no possibility to the Danish tax authorities within
extend this deadline. 12 months in the following
–– Language: Danish, Norwegian, Swedish or English year about which ultimate
–– Penalties: There are two levels of sanctions. parent / surrogate parent files the
–– Disclosure of information: This applies to all controlled transactions within CbCR in electronic form. If the
the scope of income tax return. The penalty for providing incorrect or same ultimate parent / surrogate
misleading information, whether intentionally or negligently, will be the higher parent prepares the CbCR for the
of two amounts: following fiscal years, the Danish
–– 0.5 % of revenues up to DKK 500 million, 0.1 % of the remainder up to DKK group entity is not required to
1 billion and 0.05 % of revenues over DKK 1 billion (excluding cap), or make such a notification on an
–– DKK 250,000 for companies with up to 50 employees. For every further annual basis.
50 employees [up to 500 employees], this amount increases each time by –– Penalties: Ranging between EUR
DKK 250,000. In companies with more than 500 employees the penalty 10,000 and EUR 50,000 per
will be DKK 2.5 million. company.
–– All penalties are cumulative and may be increased by 50 % if the breach –– Denmark is a signatory of the
relates to a systematic breach of the tax rules, which is the case if more Multilateral Competent Authority
than one of the above penalties is imposed. Agreement on the Exchange of
–– Preparation of documentation: If the Group is not an SME, see above. CbCR (the ”CbC MCAA”).
A company may be fined up to DKK 250.000 per fiscal year, if the TP- –– OECD‘s XML format for
documentation is not submitted within the deadline of 60 days or if submission has been
the submitted documentation is considered insufficient. If adequate implemented.
documentation is submitted after the deadline, the standard penalty may
be reduced to 50 % or DKK 125.000 per year. If the Danish tax authorities
make an upward adjustment based on the prices of the controlled
transactions and assume that they do not comply with the arm’s length
principle, the documentation penalty will be increased by 10 % of the total
upward income adjustment.
Effective in Law for fiscal years as from 1 January 2017 and optionally for 2016 Effective in Law for fiscal years as
from 1 January 2016
25Implementation BEPS Action 13
EGYPT
Master File Local File CbCR
–– T he Master File concept according to BEPS Action 13 has been incorporated in –– The CbCR according to BEPS
the domestic legislation. Action 13 has been implemented
–– Requirements / thresholds: Currently, no binding thresholds for Master or Local for FYs starting from 2018.
File. –– Threshold:
–– Deadline for the preparation: Not yet defined. –– Egyptian MNEs with a foreign
–– Submission deadline: subsidiary / subsidiaries,
–– Master File: Should be made available to the ETA. The submission deadline with an annual consolidated
corresponds to the deadline for filing the parent entity’s tax in its local juris- group revenue of at least EGP
diction. 3 billion (approx. EUR 145
–– Local File: Must be submitted to the ETA within two months after filing the million), will be required to
annual corporate tax return. prepare and file a report to
–– Duty of notification: Not yet defined. the ETA.
–– Language: Arabic –– Egyptian subsidiaries of
–– Penalties: foreign MNEs are subject to
–– A high-risk rating and increased risk of audit; the OECD threshold of EUR
–– Unilateral adjustment of transfer prices by the ETA; 750 million, and required
–– Penalties determined based on the amount of the disputed annual tax base, to file a report with the
where TP adjustments result from an audit, and expressed as a percentage jurisdiction in which the
of that amount. ultimate parent entity is
resident.
–– Submission deadline: Within
12 months after the end of the
reporting fiscal year. The first
report should be prepared for the
group’s fiscal year ending on 31
December 2018.
–– Surrogate filing: Has not been
implemented yet.
–– Secondary filing: Not indicated
in the Egyptian Tax Authority’s
announcement (TBC later).
–– Duty of notification: Should be
submitted one year after the end
of the respective fiscal year.
–– Penalties:
–– A high-risk rating and
increased risk of audit;
–– Unilateral adjustment of
transfer prices by the ETA;
–– Penalties determined based
on the amount of the disputed
annual tax base, where TP
adjustments result from an
audit, and expressed as a
percentage of that amount.
–– Egypt is not a signatory of the
Multilateral Competent Authority
Agreement on the Exchange of
CbCR (the ”CbC MCAA”).
–– OECD‘s XML format for
submission has not been
implemented yet.
Effective in Law for fiscal years as from 1 January 2018
26Implementation BEPS Action 13
ESTONIA
Master File Local File CbCR
–– The Master File concept according to BEPS Action 13 has not been implemented –– The CbCR according to BEPS 13
yet. Since 2007, Estonia has had in place a similar documentation concept that has been implemented for FYs
closely follows the Master File concept, though. starting from 2016.
–– Local documentation requirements: –– Threshold: Annual consolidated
–– Requirements / thresholds for preparing a documentation: group revenue of at least EUR 750
–– For resident credit institutions, insurance companies and business million in the preceding year.
associations registered on the stock market; –– Submission deadline: Within
–– If one transaction party is an entity with tax residency in a low tax rate 12 months after the end of the
territory; reporting fiscal year.
–– For resident corporate groups with at least 250 employees (including –– Surrogate filing: Has been
associated entities), or with a group revenue of at least EUR 50 million in implemented.
the fiscal year preceding the transaction, or a consolidated balance sheet –– Secondary filing: Has been
total of at least EUR 43 million; implemented.
–– For non-resident corporate groups, being active in Estonia via a permanent –– Duty of notification: Within 6
establishment and having at least 250 employees (including associated months after the end of the fiscal
entities), or a group revenue of at least EUR 50 million in the fiscal year year.
preceding the transaction, or a consolidated balance sheet total of at –– Penalties:
least EUR 43 million. –– EUR 3,200 and extended
–– Deadline for the preparation: A Transfer Pricing Documentation is required period of limitations for tax
only after a formal request has been sent by the Estonian Tax and Customs audits (5 years) if the CbCR
Board. has not been filed;
–– Submission deadline: Transfer Pricing Documentation should be submitted –– Any group entity resident in
to the tax authorities within 60 days of receiving their request. Estonia can be required to file
–– Duty of notification: No the CbCR if the notification
–– Language: The documents may be submitted in a foreign language. The has not been filed and
tax authorities may, however, request a translation of the documents into additionally, a penalty of EUR
Estonian, assigning a reasonable deadline for submitting the translation. 3,200 can be imposed.
–– Penalties for non-compliance: Up to EUR 3,200 plus an interest rate of 0,06 % –– Estonia is a signatory of the
per each day on the adjusted value (applicable in the case of non-compliance Multilateral Competent Authority
with the arm’s length principle). Agreement on the Exchange of
CbCR (the “CbC MCAA”).
–– OECD‘s XML format for
submission has not been
implemented yet.
Effective in Law for fiscal years as
from 1 January 2016
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