United States

IRS issues final regulations on country-by-country reporting


The IRS has issued final regulations requiring annual country-by-country reporting (CbCR) by U.S. taxpayers that are the ultimate parent of a multinational enterprise (MNE) group. The final regulations affect U.S. parent companies of an MNE with $850 million or more in global group revenues for the preceding year.

The final regulations are effective for tax years beginning on or after June 30, 2016. However, under forthcoming guidance, taxpayers will be permitted to file reports with the IRS for years beginning on or after Jan. 1, 2016, which may relieve taxpayers from having to file similar reports in other countries. In order to comply with the new requirement, taxpayers will need to use the new IRS Form 8975, Country-by-Country Report, which has not yet been released.

The final regulations require taxpayers to separately report certain items with respect to each tax jurisdiction in which one or more members of a U.S. MNE group is resident, presented as an aggregate for each category. Some of the reportable items include revenue, profit, taxes paid, capital, and number of employees. The final regulations may require taxpayers to significantly change their information reporting processes.

Accordingly, if your business is affected, you should quickly and carefully determine whether and how to adapt your current reporting systems or whether to consider adopting a new reporting system altogether to help comply with these new reporting requirements.

Enrique Rayon

Senior Director