On February 1, 2017 the OECD released key documents which will form the basis of the peer review of Action 13 (Country-by-Country Reporting). The Country-by-Country (CbC) reporting requirements contained in the Action 13 Report form one of the four BEPS minimum standards. Each of the four BEPS minimum standards is subject to peer review in order to ensure timely and accurate implementation and thus safeguard the level playing field. All members of the Inclusive Framework on BEPS commit to implementing the Action 13 minimum standard and to participating in the peer review, on an equal footing.
The peer review is a review of the legal and administrative framework put in place by a jurisdiction to implement the CbC reporting standard. This peer review is a separate exercise to the 2020 review to evaluate whether modifications to the CbC reporting standard should be made.
The peer review will evaluate the Inclusive Framework member’s implementation of the standard against an agreed set of criteria. These criteria are set out in terms of reference, which include each of the elements that a jurisdiction needs to demonstrate it has fulfilled in order to show proper implementation of the standard. The Action 13 Report, OECD (2015), recommended that the first CbC Reports be required to be filed for fiscal years beginning on or after January 1, 2016. It was however acknowledged that some jurisdictions may need time to follow their particular domestic legislative process in order to make necessary adjustments to the law. In this respect, the peer review will take account of the specific timeline followed by certain jurisdictions, and the review will focus on the efforts taken by these jurisdictions in order to meet their commitment to implement the minimum standard.
The document released on February 1, 2017 contains the key documents to be used for the peer review, which reflect the agreed approach:
(1) the terms of reference and
(2) the methodology for the conduct of peer reviews of the Action 13 minimum standard.
The terms of reference focus on the following three key aspects of the CbC reporting standard that a jurisdiction must meet:
A. The domestic legal and administrative framework
B. The exchange of information framework; and
C. The confidentiality and appropriate use of CbC reports.
Methodology for the conduct of peer reviews of the Action 13 minimum standard on country-by-country reporting
The methodology sets out the process for undertaking the peer reviews of jurisdictions’ compliance with the Action 13 minimum standard on country-by-country (CbC) reporting. It sets out the scope, the information that will be used to conduct the reviews, the timelines and procedures, outline of the peer review reports, the process for discussion and approval of reviews, amendments and interpretation, and the confidentiality of peer review documents.
All members of the Inclusive Framework on BEPS and any non-member jurisdiction relevant to the work will undergo a yearly peer review, starting from 2017. As part of the BEPS Action Plan, the 2015 Action 13 report (OECD, 2015) will be reviewed in 2020.
A phased approach for the peer review will take into account the fact that implementation by jurisdictions of the three key aspects described in the terms of reference will take place progressively, starting with putting in place the domestic legal and administrative framework and exchange of information instruments in 2016 and 2017, followed by the international exchange of CbC reports starting by mid-2018, and finally the use of those reports in tax compliance activity beginning in the second half of 2018. Such an approach will allow starting the peer reviews to identify any issues requiring improvement at an early stage rather than waiting until implementation is complete before commencing this work. It will also help anticipate and inform the discussions in 2020 of the effectiveness of the design of the CbC reporting standard
There will be three phases for the peer review structured into annual reviews, starting respectively in 2017, 2018 and 2019. Each phase will focus on different key aspects of jurisdictions’ implementation so as to mirror the evolving background. An annual review process will allow the CbC Reporting Group to report annually to the Inclusive Framework and to take into account any updates since the previous review, as well as follow-up actions of reviewed jurisdictions further to any recommendation made by the Inclusive Framework.
During phase one (starting in 2017), the review will focus on the domestic legal and administrative framework as well as certain aspects of confidentiality. During phase two (starting in 2018), the review will focus on the exchange of information framework and appropriate use. Phase two will start in the spring so as to allow feedback on the first exchanges of information which are to take place by mid-2018. During phase three (starting in 2019), the review will cover all three key aspects of jurisdictions’ implementation. A detailed timeline of each phase is provided in an Annex.
Each year's review process will culminate in the production of an annual report on CbC reporting implementation. The 2017 and 2018 annual reports will cover only the review of the key aspects in question, while the 2019 report will cover the review of all key aspects.
In this part of the document a.o. the following subjects are discussed:
· Information used to conduct the peer review
· Timeline and items covered for each peer review stage
· Data gathering and review process
· Outline of annual report on CbC reporting implementation
· Discussion and approval of annual report
· Amendments and interpretation
· Confidentiality of peer review documents
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