On 5 November 2019, the OECD released an additional guidance on the implementation of country by country reporting, containing clarifications for tax administration and multinational groups in relation to the implementation and operation of country by country reporting. Furthermore, the organization published a summary of fourteen common errors made by multinational groups when preparing the report aimed at preventing their reiteration. Purpose of the publication is to create a context of greater certainty for the operators interested by CbCR.


On 5 November 2019, the OECD published additional guidance to provide further clarifications on the correct implementation and compilation of Country by Country Reporting (“CbCR”). The purpose of the guidance is to create a context of greater certainty for both multinational groups required to prepare CbCR and tax administrations that check the contents.

Such a release comes as a result of the widespread presence of errors of various kinds and
interpretative misalignments that have made the clarifying contribution of the international organization necessary.

It is not the first time that the OECD releases new material concerning CbCR and this publication represents the last act of an evolutionary dynamic that has proved to be particularly intense on the subject. After the publication that had foreseen the CbCR (the Action 13 of October 2015), updates on the matter had been made by the OECD with additional guidance in 2016, 2017 and 2018 to which are added the two handbooks issued in 2017 concerning the effective implementation of CbCR and the tax risk assessment, and the report on the appropriate use of information contained in CbCR.

With the last release in November, contents relating to the treatment of dividends and the related taxes in Table 1 were update, while additional questions where envisaged on the existing sections regarding the use of shortened or rounded amounts in Table 1, deemed listing provision, and accounting periods shorter/longer than twelve months.

Four new sections in the guidance were included regarding: information on the sources of data in Table 3, local filing, lodging a unilateral declaration for the purposes of exchanging CbCR and the common errors made by multinational groups in preparing CbCR. In relation to this last point, the OECD posted on its website a list of the most common errors with the aim of helping multinational groups not to commit them and to facilitate tax administrations in their identification.

The guidance applies to all reporting fiscal years of multinational groups commencing on or after 1 January 2020, even if Inclusive Framework members are encouraged to apply this guidance to earlier reporting fiscal years if possible, taking in account specific domestic circumstances. Moreover, in the case an inclusive Framework member does not apply this guidance to earlier reporting fiscal year, it should, to the extent possible, allow resident entities preparing CbCR to apply this guidance on voluntary basis. 

Among the errors most commonly observed in the compilation of CbCR can be reported: the obligatory inclusion of the tax code, the homogeneity of the currency to be used, the amounts to be reported in table 1 (that must be indicated in full values and not in rounded ones) and the revenues, for which inconsistencies between total values ​​and those from which the same derive (sum of related party revenues and unrelated party ones) are to be avoided (the reference is to the three columns regarding revenues in Table 1).

Such a list will be subject to periodic review and will therefore be updated if further errors will be identified presenting occurrences worthy of reporting.

The OECD contribution, primarily aimed at creating greater certainty for the counterparties involved in CbCR (multinationals and tax administrations), goes in the direction of further strengthening this tool.

CbCR, whose purpose is to show how multinationals distribute income and other relevant variables
(profits, taxes, etc.) in the countries in which they operate, allow tax administrations to make an initial assessment on the existence of potential critical issues concerning ​transfer pricing that may prefigure a wrong tax conduct of taxpayers. Furthermore, the OECD contribution enriches a framework that certified in the last September, with the release of the results regarding the second phase of the CbCR project, the expansion of the CbCR exchange network that reached 166 countries and is able now to guarantee a global coverage of all multinationals recording levels of consolidated turnover over USD 750 million.

Therefore, this OECD publication, as well as the previous ones, aimed at promoting methodological consistency and fiscal certainty is particularly useful to affirm standards that can make tax risk assessment easier by the tax administrations and make easier and more straightforward their dialogue with taxpayers.


Matteo Coppola              
Transfer Pricing Manager - Milan