On January 20, 2016, the Federal Council approved the signing of the multilateral agreement on the exchange of country-by-country reports. The agreement was developed within the scope of the OECD’s BEPS project on corporate taxation. It describes the type of information exchanged between states on the activities of multinationals in their territory. Switzerland will determine at a later stage with which partner countries it wishes to make such exchanges.
After the signing of the Convention on Mutual Administrative Assistance in Tax Matters (with effective date January 1, 2017), the signature of the multilateral agreement on the exchange of country-by-country reporting (or in other terms, the multilateral competent authority agreement on country-by-country reporting; CbC MCAA) is the second of three steps to build the legal foundation for introducing the country-by-country reporting obligation in Switzerland. The CbC MCAA will be submitted for consultation and afterwards will go through the ordinary Swiss approval process. The third step will be specific domestic Swiss legislation on CbC reporting which is currently in the process of being drafted with the aim to be introduced and be effective as of January 1, 2018.
While all the legal requirements to submit country-by-country reporting are taking shape in Switzerland, numerous other countries have already implemented not only country-by-country reporting but also enacted relevant domestic law to the new transfer pricing documentation approach as proposed by action item 13 of the BEPS initiative (3 tired approach: Master File, Local File, CbC reporting).
Swiss based multinational companies with revenues above the equivalent of Euro 750 million are well advised to assess now their ability to prepare a country-by-country report based on their current IT landscape, to critically analyze a first draft of their CbC report and, if appropriate, to implement risk mitigation strategies before the first reports are exchanged.
Click here to read the press release of the Federal Council.