Executive summary

On 16 September 2024, the Organisation for Economic Co-operation and Development (OECD) published the compilation of the outcomes of the seventh annual peer review (the Compilation) of the minimum standard on Action 13 (Transfer Pricing Documentation and Country-by-Country Reporting) of the Base Erosion and Profit Shifting (BEPS) project. The Compilation covers 138 jurisdictions and confirms that jurisdictions' implementation of country-by-country (CbC) reporting (CbCR) is largely consistent with the Action 13 minimum standard.

According to the OECD press release, more than 115 jurisdictions have introduced legislation to impose a CbCR obligation on multinational entity (MNE) groups, applicable to almost all MNE groups with consolidated group revenue at or above the threshold of €750m. Additional Inclusive Framework member jurisdictions are working toward finalizing their domestic legal frameworks with the support of the OECD. Where legislation is in place, the implementation of CbCR has been found largely consistent with the Action 13 minimum standard. More than 3,300 bilateral relationships for the exchange of CbC reports are now in place.

The BEPS Action 13 peer review is an annual process, with the next peer review report to be released in the third quarter of 2025.

Detailed discussion

Background

In October 2015, the OECD released the final reports on all 15 BEPS Action Plan focus areas.¹ Action 13 establishes CbCR requirements as a minimum standard subject to peer review. On 1 February 2017, the OECD released terms of reference for the peer review on the implementation of BEPS Action 13 on CbCR,² including the items to be reviewed in three key areas: (i) the domestic legal and administrative framework; (ii) the exchange of information framework; and (iii) the confidentiality and appropriate use of CbC reports.

The peer review process takes a staged approach, which is intended to allow for the early detection of inconsistencies with the minimum standard and provide jurisdictions with an opportunity to address those inconsistencies. During phase one of the peer review, the review focused on the domestic legal and administrative framework and certain aspects of confidentiality. During phase two, the review focused on the exchange of information framework and appropriate use. For phase three and onward, the review has covered all three key aspects of jurisdictions' implementation.

On 23 May 2018, the OECD released the first compilation of annual peer reviews, reflecting the review of 95 jurisdictions that provided legislation or information pertaining to their implementation of CbCR.³ The second compilation of annual peer reviews, covering a total of 116 jurisdictions, was released on 3 September 2019.⁴ This was followed by: the third, covering a total of 131 jurisdictions, released on 24 September 2020;⁵ the fourth, covering a total of 132 jurisdictions, released on 18 October 2021;⁶ the fifth, covering a total of 134 jurisdictions, released on 4 October 2022;⁷ and the sixth, covering a total of 136 jurisdictions, released on 25 September 2023.⁸

Seventh annual peer review report on CbCR

On 16 September 2024, the OECD published the Compilation of the outcomes of the seventh annual peer review of the minimum standard on Action 13. The Compilation reflects a finding that jurisdictions' implementation of CbCR has been largely consistent with the Action 13 minimum standard. The report on each jurisdiction generally reflects its implementation status as of 31 March 2024, with the information on the exchange of CbC reports reflecting the exchange status as of 31 December 2023.

According to the executive summary accompanying the Compilation, the seventh annual peer review covers the 138 jurisdictions that provided legislation and/or other information relating to their implementation of CbCR, which involves almost all MNE groups with consolidated group revenue of at least €750m. Some Inclusive Framework member jurisdictions were not included in the peer review, either because they joined the Inclusive Framework after 1 October 2023 (at which point it was too late to incorporate them into this peer review) or because they opted out of peer review in accordance with the peer review terms of reference.⁹ Jurisdictions opting out of peer review must confirm that they do not have any resident entities that are the Ultimate Parent Entity of an MNE group with revenue meeting the consolidated revenue threshold and will not require local filing of CbC reports. Each jurisdiction reviewed received its own report, all of which together make up the Compilation.

Legislation implementing CbCR is in place in more than 115 jurisdictions. In the review, 19 jurisdictions received a general recommendation to put in place or finalize their domestic legal or administrative framework for CbCR,¹⁰ and 37 jurisdictions received one or more recommendations for improvements to specific areas of their CbCR framework. In total, 60 jurisdictions received at least one recommendation from the seventh peer review or still have a recommendation outstanding from a previous peer review.¹¹

The Compilation further reports that 93 jurisdictions have multilateral or bilateral competent authority agreements in place, resulting in more than 3,300 exchange-of-information relationships. Of the jurisdictions included in this peer review, 99 have undergone an assessment by the Global Forum on Transparency and Exchange of Information for Tax Purposes concerning confidentiality and data safeguards in implementing the automatic exchange-of-information standard and did not receive any action plan in this regard. As it contains nonpublic information on jurisdictions' internal systems and procedures, the outcomes of that assessment are not published, and the Compilation provides no further details of the confidentiality review.

In addition, 84 jurisdictions have provided detailed information about the appropriate use of CbC reports, enabling the Inclusive Framework to obtain sufficient assurance that the jurisdictions have measures in place to ensure the CbC reports' appropriate use.

Work will continue to monitor the implementation and operation of CbCR by member jurisdictions of the Inclusive Framework and the progress that jurisdictions make in addressing any recommendations they have received. The next peer review report will be released in the third quarter 2025.

Implications

The Compilation highlights the widespread implementation of CbCR requirements and the increased sharing of tax and financial data among tax authorities as a result. Companies should expect that information provided to one tax authority through the filing of a CbC report will be shared with other relevant jurisdictions. In addition, plans for future deployment of OECD risk assessment tools, together with many tax authorities' existing use of CbCR data analytics, underscores the need for companies to be confident that their data governance approach is sufficient to meet current and future demands. Moreover, CbC reports are central to several ongoing global projects, including the OECD/G20 BEPS 2.0 project and the Pillar Two Transitional CbCR Safe Harbour in particular.