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US, New Zealand Agree To Exchange CbC Reports

by Mike Godfrey,, Washington

07 June 2017

The US Internal Revenue Service (IRS) has signed a new bilateral arrangement with the New Zealand Inland Revenue to share country-by-country (CbC) reports on an annual basis.

The CbC report is one element of a new three-tiered standardized approach to transfer pricing documentation as proposed by the OECD in BEPS Action 13. CbC reporting requires multinational enterprises to provide aggregate information annually, in each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.

In June 2016, as part of its efforts to implement the OECD's base erosion and profit shifting (BEPS) project in respect of US taxpayers, the IRS issued final regulations requiring CbC reporting on Form 8975 by US persons that are the ultimate parent entity of an MNE group with revenue of USD850m or more in the preceding accounting year.

Under the new arrangement, the competent authorities of the two countries will share information about multinationals operating in New Zealand and the US. They will begin exchanging reports with each other from 2018.

New Zealand's Revenue Minister, Judith Collins, said the development "means Inland Revenue will have better information about how multinationals allocate profits from their operations here. This will further enhance Inland Revenue's risk assessment processes to make sure that the right amount of tax is being paid."

"The exchange of CbC reports is a key part of the OECD's work on base erosion and profit shifting (BEPS) so I'm pleased to see we've been one of the first to sign a bilateral arrangement with the US," she said.

New Zealand is one of the 89 countries that have signed the OECD's multilateral agreement on the exchange of CbC reports, as of May 12, 2017. The US is not a signatory to the agreement and is therefore pursuing bilateral deals.

TAGS: compliance | tax | business | tax compliance | tax avoidance | law | Internal Revenue Service (IRS) | ministry of finance | tax authority | agreements | multinationals | legislation | transfer pricing | New Zealand | United States | tax reform | BEPS

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