CPABC in Focus - May/June 2015 | Page 38
E
in which the MNE operates.
The data to be provided in the CbyC template consists of revenue (both related and
unrelated); profit before tax; income tax paid
and accrued; stated capital; the number of
employees; and tangible assets. Specifically,
the report is meant to provide or identify:
• n understanding of the “bigger
A
picture”;
• global view of the MNE’s value chain;
A
• hether revenues and profits recognized
W
in particular jurisdictions accord with
the people and the functions performed
in those jurisdictions;
• isibility regarding affiliates (and their
V
results) located in low-tax jurisdictions or
havens; and
• e potential artificial shifting of
Th
substantial amounts of income into
tax-advantaged environments.
Early in 2015, the G20 finance ministers
announced that CbyC reporting will become
a requirement for all MNEs with annual
consolidated revenues greater than US$850
million, effective for the 2016 taxation year.
At the time of this writing, details about
how the CbyC reports are to be filed and
shared among participating tax authorities
were not yet available. But it’s not hard to
imagine the scrutiny with which tax authorities will review an MNE group’s transfer
pricing if, for example, the CbyC template
shows millions of third-party revenue and
hundreds of employees in North America but
only nominal profit, while the group’s related
Barbados entity shows only related-party
revenue and a nominal number of employees
but millions in profit.
Interestingly, the OECD has stated that an
MNE is allowed to choose which data it will
use to populate the CbyC template (i.e. separate entity statements, regulatory statements,
or internal management statements). Different
sources may produce different results.
What this all means
There are several key takeaways from the
OECD guidance:
The landscape is changing
Although the OECD transfer pricing guidelines are not the law in Canada, most practitioners believe it is only a matter of time
before Canada and other countries legislate
or require that the OECD three-tiered approach, or some variation thereof, be applied
in their jurisdictions.2
The existing transfer pricing documentation
is more narrowly focused and limited than the
new guidelines, which call for much greater
disclosure regarding all aspects of an MNE’s
business and results. The best way for large
MNEs to prepare for the transition to greater
pain, for example, recently announced
S
2
that Spanish-based MNEs with revenues
greater than ¤45 million (equivalent to
approximately C$60 million to C$65
million) will now be required to prepare
and submit a master file as well.
Finally, something both sides
of your brain can agree on.
©2015 Mercedes-Benz Canada Inc.
Shown above is the 2015 C400 4MATIC™ Sedan with optional Sport Package.
CPABC members receive a fleet discount. For more information, call Randall DesBrisay at 604-351-5290 or email [email protected]
Mercedes-Benz Vancouver
550 Terminal Avenue, Vancouver
D#6276
Mercedes-Benz Boundary
3550 Lougheed Highway, Vancouver
D#6279
38 CPABC in Focus •May/June 2015
2015-04-1666-MB-April-C-Class Fleet-CPABC Ad.indd
Mercedes-Benz North Shore
1375 Marine Drive, North Vancouver
D#6277
Mercedes-Benz Richmond
5691 Parkwood Way, Richmond
D#6278
Mercedes-Benz Surrey
15508-104 Avenue, Surrey
D#11013
1
2015-04-1666-MB-April-C-Class Fleet-CPABC Ad.indd
2015-04-08 5:01 PM
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