Taxand USA outlines the impact of the introduction of CbC into US regulations, and details essential steps that in-house tax teams should be taking now to prepare for the mandatory CbC filing requirements.
In April 2016, Robert Stack, the US Department of the Treasury’s deputy assistant secretary for international tax affairs, shocked the transfer pricing community by stating that country-by-country (CbC) reporting regulations were expected to be finalised by 30 June 2016. The Treasury has exceeded this aggressive deadline, and on 29 June (24 hours early!) final regulations were released. US multinational enterprises meeting the annual revenue threshold of $850 million will now be required to file US CbC reports for tax years beginning on or after 1 July 2016.
The astonishingly rapid progression from draft regulations issued in December 2015 to final regulations in June 2016 has come to the great surprise of many in the transfer pricing industry, particularly considering that prior estimates (and indeed initial draft regulations) indicated the earliest introduction was to be 2017.
CbC has become a harsh reality for US MNEs. Regardless of when the first filing is due in the US, for every US MNE with revenues above the $850-million threshold, filing a CbC report is now a mandatory annual task. Despite the rapid progression of regulations, there is still time for MNEs to adopt measures ensuring that when the time comes to produce the CbC reports, the relevant information systems are able to generate the information required, and any qualitative story is ready to be told.