The Country By Country Report

The Country-by-Country (CbC) report is a key component of international tax compliance, enhancing transparency and reducing profit shifting within multinational enterprises (MNEs).

In Singapore, CbC reporting is mandated by the Organization for Economic Cooperation and Development (OECD) as part of Action 13 within the Base Erosion and Profit Shifting (BEPS) package.

Understanding CbC Reporting

The CbC report applies to an accounting period that meets the following criteria:

The group’s consolidated turnover for the previous accounting period must be at least EUR 750 million (or its equivalent in Singapore Dollars – SGD).
The group must have entities or activities in two or more tax jurisdictions.

The CbC report provides consolidated, jurisdiction-level details on the global allocation of income, taxes paid, and economic activities of the MNE group.

CbC Reporting in Singapore

Singapore signed the Multilateral Competent Authority Agreement (MCAA) on June 21, 2017, enabling the automatic exchange of CbC reports. This aligns Singapore’s regulatory framework with international transparency standards.

The Inland Revenue Authority of Singapore (IRAS) is responsible for overseeing CbC reporting requirements.

Who Needs to File the CbC Report?

Entities must file a CbC Report with IRAS if they meet all the following conditions:

They are the ultimate parent entity (UPE) of a Singapore MNE group.
They are tax resident in Singapore.
Their MNE group’s consolidated revenue in the preceding financial year is at least SGD 1,125 million.
Their MNE group has subsidiaries or operations in at least one foreign jurisdiction.

Secondary Filing Obligation

If the UPE is not a tax resident of Singapore, a Singapore entity within the group must file a CbC Report if any of the following conditions apply:

The UPE is not required to file a CbC Report in its tax jurisdiction.
The UPE’s tax jurisdiction has an agreement with Singapore for tax information exchange, but no CbC exchange arrangement exists by the filing deadline.
The jurisdiction of the UPE fails to exchange CbC reports, as notified by the Commissioner to the Singapore entity.

A Singapore entity is exempt from filing if another Singapore entity in the group has already filed, or if the group has designated a Surrogate Parent Entity (SPE).

Key Filing Deadlines and Compliance Measures

Notification Requirement: Companies must notify IRAS within 3 months after the close of the accounting period.
CbC Report Submission: The deadline for filing is 12 months after the end of the relevant accounting period.

Penalties for Non-Compliance:

Failure to file or late submission may result in penalties.
Providing false or inaccurate information may lead to enforcement actions.
Service providers involved in CbC reporting are also subject to compliance obligations and penalties.

Conclusion

The Country-by-Country Report is a crucial tool for promoting tax transparency and fair business practices on a global scale. Accurate and timely compliance is essential, particularly for MNEs involved in transfer pricing and cross-border transactions.

For professional guidance on CbC reporting obligations, compliance measures, and tax planning, contact us today to navigate the complexities of Singapore’s tax landscape.