The US first released draft rules on CbCR in December 2015, proposing that CbCR would take effect from 2017. Moving the finalisation of the proposal forward six months means taxpayers will be required to prepare CbC reports from the tax year beginning July 1 2016.
Taxpayers have raised concerns over a delay in the US implementing CbCR. The US introducing the requirement after other countries, like the UK and the Netherlands, would potentially mean that US headquartered multinationals would be required to instead file CbC reports in each country where a subsidiary is present, instead of a single report in the US.
“The US 2017 tax year reporting obligation for a US headquartered MNE of filing a country-by-country report presents many complications,” said Keith Brockman, EMEA tax director at Mars.
“Determining one or more surrogate entities for filing a CbCR, and reviewing every country’s CbCR legislation, presents additional complexities of determining where to file, as well as the due date for filing. This timing mismatch presents additional challenges to be met by US MNEs,” added Brockman.
Stack acknowledged this as an issue, and is keen that it should be addressed, not just by the US but by other countries as well.
“We know that countries are grappling with how to handle the fact that there will be some variation in effective dates,” Stack told Bloomberg BNA. “We hope that countries will smooth the way for the successful long term implementation of CbCR and not cause unnecessary confusion and complexity in the start-up phase by requiring a single year of local filing for companies resident in countries in the process of putting the rules in place, such as the US”
