IRS Is Now Accepting Country-by-Country Reports

On August 11, the IRS issued a press release announcing that it is now accepting country-by-country (CbC) reports and advised that parent entities of US multinational enterprise groups should now file Form 8975 with their annual income tax return. 

US Multinationals to File CbC Reports

Parent entities of US multinational enterprise (MNE) groups with $850 million or more of revenues in a previous annual reporting period can now file Form 8975, Country-by-Country Report, with their annual income tax return. Form 8975, and attached Schedules A, will report a US MNE group’s income, taxes paid, and other indicators of economic activity on a country-by-country basis.

Understanding Tax Jurisdiction of Residence

A business entity generally is considered a resident in a tax jurisdiction if, under the laws of that tax jurisdiction, the business entity is liable to tax therein based on place of management, place of organization, or another similar basis. A business entity is not considered a tax resident in a tax jurisdiction if the business entity is liable to tax in such tax jurisdiction only by reason of a tax imposed by reference to gross amounts of income without any reduction for expenses, provided such tax applies only with respect to income from sources in such tax jurisdiction or capital situated therein.

The First Reporting

The first required reporting period for an ultimate parent entity is the 12-month reporting period that begins on or after the first day of a tax year of the ultimate parent entity that begins on or after June 30, 2016.

Sources: IRS - Press Release, Instructions for Form 8975, Schedule A, Form 8975

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