The Organisation for Economic Co-operation and Development (“OECD”) issued updated guidance (“Guidance”) on the implementation of country-by-country reporting (“CbC”) in September 2017.  The Guidance adds certain items to the version issued in July 2017.  The new items are:

  1. DEFINITION OF REVENUES. The Guidance provides that “all revenue, gains, income, or other inflows shown in the financial statement prepared in accordance with the applicable accounting rules relating to profit and loss, such as the income statement or profit and loss statement, should be reported as Revenues in Table 1.”[1]  For example, if the income statement shows “sales revenue, net capital gains, net capital gains from sales of assets, unrealized gains, interest received, and extraordinary income, the amount of those items reported in the income statement should be aggregated and reported as Revenues in Table 1.”[2]  Items reflect in net assets and the equity section of the balance sheet, such as comprehensive income/earnings, revaluations, and/or unrealized gains should not be reported as Revenues.[3]  Finally, income items shown on the income statement on a net basis need not be adjusted to a gross basis.
  2. AMOUNT OF INCOME TAX ACCRUED AND INCOME TAX PAID. Income Tax Accrued-Current Year is “the amount of accrued current tax expense recorded on taxable profits or losses for the Reporting Fiscal Year of all Constituent Entities resident for tax purposes in the relevant tax jurisdiction irrespective of whether or not the tax has been paid (e.g. based on a preliminary tax assessment).”[4]  Income Tax Paid (on Cash Basis) is “the amount of the taxes actually paid during the Reporting Fiscal Year, which should thus include not only advanced payments fulfilling the relevant fiscal year’s tax obligation but also payments fulfilling the previous year(s)’ tax obligation (e.g. payment of the unpaid balance of corporate income tax accrued in relation to the previous year(s), including payments related to reassessments of previous years), regardless of whether those taxes have been paid under protest.”[5]  Income tax refunds should, in general, be reported in Income Tax Paid (on Cash Basis) in the reporting fiscal year in which the refund is received.  An exception may be permitted where the refund is treated as revenue under the applicable accounting standard or in the source of data used to complete Table 1.  In such a case, the taxpayer should indicate as such in Table 3.
  3. SHORT ACCOUNTING PERIOD. For a Multinational Enterprise (“MNE”) Group with a short accounting period beginning on or after January 1, 2016, and ending before December 31, 2016, tax jurisdictions may allow the Reporting Entity of the MNE Group to file the CbC report in accordance with the same timelines as for MNE Groups with a fiscal year ending on December 31, 2016.

[1] Guidance, p. 5.
[2] Id.
[3] Id.
[4] Id., p. 8.
[5] Id.