BEPS Action 13: Transfer Pricing Documentation and Country-by-Country Reporting

Action 13 introduces a three-tiered documentation structure for transfer pricing: Master File (group-wide information), Local File (country-specific transactions) and Country-by-Country Report (CbCR – aggregated data per tax jurisdiction).

• Minimum standard – mandatory for Inclusive Framework members
• CbCR applies to groups with consolidated annual revenue ≥ EUR 750 million
• CbCR contains: revenue (related/unrelated party), pre-tax profit, taxes paid and accrued, stated capital, accumulated earnings, number of employees, and tangible assets per jurisdiction
• Annual automatic exchange of CbCR between tax authorities
• Peer review process monitors quality and implementation; over 100 jurisdictions have implemented CbCR with more than 3,400 bilateral exchange relationships

Prior to BEPS Action 13, transfer pricing documentation requirements varied considerably between countries. Tax authorities had little visibility into the global structure of multinational groups. The 2015 final report standardised documentation requirements.

The CbCR mechanism started with reports for fiscal years beginning on or after 1 January 2016. The EU implemented CbCR in 2016 through the Administrative Cooperation Directive (DAC 4, Directive 2016/881/EU). Most OECD countries and EU Member States have implemented CbCR requirements in domestic law. The EU additionally introduced public CbCR for large groups in 2021 (Directive 2021/2101), applicable for fiscal years beginning on or after 22 June 2024.

Action 13 applies to multinational groups with consolidated annual revenue of at least EUR 750 million. The obligation falls on the ultimate parent entity (UPE) which files the CbCR. Where the UPE is resident in a jurisdiction that does not require CbCR filing or does not exchange CbCR data, another group entity may file on behalf of the group as a surrogate parent entity (surrogate filing). Components:

• Master File: Group structure, IP, financing, intra-group transactions
• Local File: Local transactions with related parties, contracts, financial analyses
• CbCR: Aggregated data per jurisdiction (revenue, profit, taxes, headcount, book value of assets)

• Annual CbCR filing by the ultimate parent entity (or surrogate filing) within 12 months of the end of the fiscal year
• Automatic exchange of CbCR between competent tax authorities (MCAA-CbCR)
• Preparation of Master File and Local File per OECD standard
• Record retention obligations (typically 5 years)
• Penalties for non-filing or misstatements (subject to domestic law)
• CbCR serves as a risk assessment tool – not a substitute for arm's length analysis

3 corrections:
- First CbCR exchange was June 2018, not January 2017
- key_dates: Public CbCR applies from 22 June 2024, not 1 January 2025
- EU Public CbCR applies from fiscal year 2024, not 2025
1 update:
- last_amended date (2023-01-01) imprecise
5 clarifications.
3 notes.