Taxpayers play the waiting game on CbCR audits

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Taxpayers play the waiting game on CbCR audits

waiting-game-tax-600x375

Corporate taxpayers expect country-by-country reporting (CbCR) to lead to a number of audits and subsequent disputes, but the tax authorities are yet to make a move and taxpayers are cautious of the silence.

Since CbCR came into force, tax directors have been waiting for that awkward phone call from the tax authorities. One tax director at a Swiss insurance group said: “It’s curious to me that we’ve not yet had a single question about our CbC report.”

One head of tax at a global retail business had a theory as to why the tax authorities may be taking their time. “My guess is the tax authorities don’t understand the file and they don’t know what to do with the information they’ve received,” they said during one discussion at the Managing Global Tax Disputes Summit in London on April 30.

Whatever the reasons may be for tax authorities not asking questions about taxpayer CbC reports yet, the underlying nervousness among businesses goes deeper than an audit.

“Businesses are more concerned with the risks to their reputation than ever before,” said Kim Boylan, head of the global tax practice at White & Case. “You might not want to do certain things if there’s a risk of ending up on the front page of the Wall Street Journal.”

This is why many taxpayers hope that the CbC reports stay in servers and are not opened to the public. Tax transparency is still incomplete and very new in a world traditionally shrouded in secrecy.

“If you send out your tax affairs into the world, the figures can be easily misinterpreted without an expert perspective,” the head of tax from the retail company said. “Something damaging could get out and the company might never be able to repair the damage.”

Another event attendee agreed that this misinterpretation is a significant reason for keeping CbC data private: “The proposal to make CbCR publicly available would be counter-productive because the public does not understand the complexity of tax.”

Not every tax director takes this view though. After all, US companies are used to publishing financial statements detailing every aspect of their business – including their tax affairs – to the press and public.

One vice president of tax at a US energy business is not worried about CbCR. “If increased transparency is causing you angst, I think you’ve got a problem,” the vice president said. “It’s here to stay. You see it with our auditors and our board of directors.”

“Frankly, you’ve got bigger problems. The definitional changes in transfer pricing are much more important and all taxpayers need to move on this,” he added.

Regardless, CbC reports can be exchanged under tax treaties, noted Brian Gleicher, head of the TP practice at White & Case. He warned that audits from CbCR data will come and disputes will arise from this.

more across site & shared bottom lb ros

More from across our site

Countries which care about fair taxation of tech multinationals and equitable global distribution of wealth should back the UN’s tax framework, writes economist Abdelmalek Riad
The cuts disproportionately affected staff in certain positions, the report also found; in other news, MHA announced the €24m acquisition of Baker Tilly South East Europe
The plan aims to improve the efficiency, transparency, and effectiveness of direct tax administration in India
Meanwhile, South Africa’s finance minister has accepted a court decision on suspending a VAT increase and US President Donald Trump mulls a 100% tariff on foreign films
Jaime Carey speaks about the benefits of his tax background, DEI values, the use of AI for a smarter legal practice, and other priorities that will define his presidency
Historically low levels of attrition over consecutive years made a ‘difficult decision’ necessary, PwC has reportedly said
WTS Global is also vetting new potential member firms in Algeria, Cote D’Ivoire and Benin, Kelly Mgbor tells ITR in an exclusive interview
The scope of qualifying pillar two tax credits could reportedly be broadened; in other news, hundreds of IRS appeals staff are to resign
For many taxpayers, the prospect of long-term certainty that a bilateral APA offers can override concerns about time, cost and confidentiality
Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
Gift this article