May 23, 2016

On May 12, 2016, six countries  (Canada, Iceland, India, Israel, New Zealand and the People's Republic of China) signed the Multilateral Competent Authority Agreement for the Automatic Exchange of Country-by-Country reports ("MCAA"), bringing the total number of signatories to 39 countries.

The MCAA allows all signatories to bilaterally and automatically exchange Country-by-Country Reports 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 multinational enterprises (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. 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.

Beyond the MCAA signing ceremony, Israel and the Russian Federation joined the 80 current signatories to the CRS Multilateral Competent Authority Agreement, the key international framework agreement for putting in place the automatic exchange on offshore financial accounts foreseen by the OECD Common Reporting Standard.

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