The CbC report, also known as the Country-by-Country report, is a crucial component of international tax compliance since it promotes openness and reduces profit shifting inside multinational firms.
In Singapore, this report is mandated by the Organization for Economic Cooperation and Development (OECD) as a cornerstone of Action 13 within the Base Erosion and Profit Shifting (BEPS) package.
Understanding CbC Reporting
The CbC report is relevant for an accounting period that satisfies the following two requirements:
- The group's consolidated turnover for the previous accounting period must be at least 750 million EUR or its equivalent in Singapore Dollars (SGD).
- The group must have constituent entities or activities in two or more tax jurisdictions.
This comprehensive report necessitates consolidated information on a per-tax-jurisdiction basis, encompassing vital aspects such as the global allocation of income, taxes paid, and specific indicators related to the location of economic activity among the tax jurisdictions in which the group operates.
CbC Reporting in Singapore
Singapore signed the Multilateral Competent Authority Agreement (MCAA) on June 21, 2017, regarding the exchange of CbC reports. With the CbC MCAA signed, Singapore will be able to quickly and effectively create a large network of exchange partnerships for the automatic exchange of CbC Reports.
Singapore's regulatory framework for CbC reporting aligns with international standards, emphasizing compliance and transparency. The Inland Revenue Authority of Singapore (IRAS) oversees the implementation of CbC reporting requirements.
Who needs to file the CbC Report?
You will need to file a CbC Report with IRAS if you meet all of the following requirements:
- You are the ultimate parent entity of a Singapore MNE group;
- You are tax resident in Singapore;
- The consolidated group revenue for your MNE group in the preceding FY is at least S$1,125 million; and
- Your MNE group has subsidiaries or operations in at least 1 foreign jurisdiction.
The ultimate parent entity (UPE) that is a tax resident in Singapore holds the primary responsibility for filing a CbC Return. This obligation is applicable for each accounting period commencing on or after January 1, 2018.
In situations where the UPE is not a tax resident of Singapore, a Singapore Entity within a Reportable Group assumes a secondary obligation to file a CbC Return under specific conditions:
- The UPE is not obligated to file a CbC Report in its tax jurisdiction.
- The tax jurisdiction has an international agreement with Singapore for automatic exchange of tax information, but no exchange arrangement exists for CbC Reports by the filing deadline.
- There has been a systemic failure by the jurisdiction to exchange CbC Reports, as notified to the Singapore Entity by the Commissioner.
A Singapore Entity is exempt from filing a CbC Return under the mentioned conditions if another Singapore Entity within the Reportable Group files the CbC Return or if the Reportable Group designates a constituent entity as its surrogate parent entity (SPE).
Key Filing Deadlines and Compliance Measures
Singapore Entities are required to provide notification within three months after the close of the relevant accounting period. The deadline for submitting a CbC Return is 12 months after the end of the applicable accounting period or as specified by the Commissioner.
Engaging service providers (SPs) for CbC Returns is permissible, but adherence to compliance measures is imperative. Penalties are enforced for failures to file CbC Returns and providing misleading, false, or inaccurate information. Some penalty provisions extend to service providers as well.
Conclusion
The Country-by-Country Report in Singapore serves as a vital instrument for promoting tax transparency and fairness in the global business landscape. Ensuring compliance with CbC reporting requirements is integral, often intersecting with transfer pricing considerations. Precision and timeliness in this process are paramount.
Contact us today for more information and to navigate the complexities of CbC reporting in Singapore.