OECD Guidance on Country-by-Country Reporting - Is it feasible?


OECD has recently published a draft guidance on TP documentation and Country-by-Country reporting under BEPS Action Plan. OECD has suggested two tier approach for TP documentation containing master file and local file. The information/disclosure to be given under proposed guidance include details like MNE group’s organisational structure, business description, intangibles, inter-company financial activities, financial & tax position as well as country-by country reporting of details such as place of management of each entity, revenue, earnings, tax paid , number of employees, etc.


Would this step help in curbing aggressive tax planning and tax avoidance by MNEs through transfer pricing mechanism? What are the practical issues likely to be faced by taxpayers in complying with the proposed requirement? Are the tax authorities equipped to efficiently and fruitfully utilize such information without causing undue harassment to the taxpayers? Are any changes required in OECD's draft proposals?