Six countries, namely India, China, Israel, New Zealand, Canada and Iceland, signed a Multilateral Competent Authority agreement for the automatic exchange to boost transparency by multinational enterprises (MNEs). The signing ceremony took place in Beijing on 12 May 2016.
With this, the total number of signatories came up to 39.
• The pact allows all signatories to bilaterally and automatically exchange Country-by-Country Reports ("CbC MCAA") with each other, as contemplated by Action 13 of the BEPS Action Plan.
• It will help ensure that tax administrations obtain a complete understanding of how MNEs structure their operations, while also ensuring that the confidentiality of such information is safeguarded.
• The OECD/G20 BEPS Project set out 15 key actions to reform the international tax framework and ensure that profits are reported where economic activities are carried out and value created.
• BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from MNEs.
• Country-by-country reporting will require MNEs to provide aggregate information annually, in each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group.
• It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in.
G20 leaders endorsed the wide-ranging BEPS package in November 2015, marking an historic opportunity for improving the effectiveness of the international tax system.
The signed package was a result of more than two years of discussions involving all OECD and G20 countries. The discussions also included more than a dozen developing countries.
Organisation for Economic Co-operation and Development (OECD)
OECD is an international economic organisation of 34 countries, founded in 1961 to stimulate economic progress and world trade. It aims at promoting policies that will improve the economic and social well-being of people around the world.
• The OECD provides a forum in which governments can work together to share experiences and seek solutions to common problems.
• It works with governments to understand what drives economic, social and environmental change.
• It measure productivity and global flows of trade and investment.
• It analyse and compare data to predict future trends.
• It set international standards on a wide range of things, from agriculture and tax to the safety of chemicals.
In 1948, the OECD originated as the Organisation for European Economic Co-operation (OEEC), to help administer the Marshall Plan for reconstruction of a continent ravaged by war.
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When: 12 May 2016