IISD-31 Countries Agree on Multinational Transparency Measures
27 January 2016: As part of the Organization for Economic Co-operation and Development (OECD)/G20 project on Base Erosion and Profit Shifting (BEPS), 31 countries have signed the Multilateral Competent Authority Agreement (MCAA), which aims to increase transparency by multinational enterprises (MNEs). The OECD/G20 BEPS Project sets out 15 key actions to reform the international tax framework and ensure that profits are reported where economic activities are carried out.
The signing ceremony took place on 27 January 2016, in Paris, France, following on the G20 leaders' endorsement of the BEPS project in November 2015.
The MCAA, addressing automatic exchange of Country-by-Country reports, is expected to increase cross-border cooperation on tax matters by enabling: tax administrations to obtain a complete understanding of the way MNEs structure their operations; the safeguarding of information's confidentiality; and the consistent implementation of new transfer pricing reporting standards developed under Action 13 of the BEPS Action Plan.
OECD Secretary-General Angel Gurría said country-by-country reports are “a critical risk assessment tool" beause they allow tax administrations to assess transfer pricing and other BEPS risks, and deploy audit resources where they will be most effective.
With MCAA, tax administrations where a company operates will get aggregate information annually on the global allocation of income and taxes paid by the MNEs, along with other indicators of the location of economic activity within the MNE group. The information will be collected by the country of residence of the MNE group, and then exchanged per agreements such as MCAA. The exchanges will start in 2017-2018 on 2016 information.
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