Action 13 of the OECD’s base erosion and profit shifting (BEPS) project aims to enhance transparency for tax administrations by introducing a country-by-country (CbyC) reporting requirement that large multinational enterprises (MNEs) must complete and file annually for each tax jurisdiction in which they do business. By jurisdiction, MNEs must provide information on revenue, profit before income tax, and income tax paid and accrued in their CbyC report.
KPMG's CbyC risk assessment and benchmarking services can help MNEs analyze their CbyC reporting positions to identify potential risk areas by individual taxing jurisdiction, as well as advise them as to how their CbyC reporting positions compare to those of other groups.
KPMG analyzes an MNE’s CbyC reporting positions based on the risk criteria identified by the OECD, as well as other relevant factors, such as materiality risk (e.g., entity size within the observed tax jurisdiction relative to the MNE group and to the respective country’s GDP) and tax authority risk factors (e.g., aggressiveness of a particular country’s tax authority based on KPMG experience and the company’s audit history). By pulling together the OECD’s 19 risk factors and other relevant information, KPMG’s risk assessment can help the MNE by providing a detailed view into its BEPS-related tax exposure from its CbyC reporting positions and an overall risk rating for each country listed on its CbyC report. This helps the MNE to understand where it might best focus its efforts to manage BEPS risk.
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