This tax news will interest: Thai entities that are the Ultimate Parent Entities or are part of the group entities obliged to file the Country-by-Country reporting.
What is the CbC MCAA and its current status?
The Country-by-Country Multilateral Competent Authority Agreement (CbC MCAA) is a mechanism for mutually sharing financial information between participating countries' tax authorities. It promotes transparency and accountability among multinational enterprises (MNEs) and helps tax authorities identify and address tax evasion, base erosion, and profit shifting.
Participating countries must sign and ratify the agreement, implement reporting requirements, and establish a framework for exchanging information among participating tax authorities.
As of 24 January 2023, 96 countries have signed the CbC MCAA.
Challenges and considerations for CbC Reporting in countries outside of CbC MCAA
Some countries have not yet signed the CbC MCAA or have implemented the exchange of information differently from the CbC MCAA. For instance, if the USA has not entered or not intending to enter into the CbC MCAA, Thailand cannot retrieve the CbC Reporting from the USA. If such MNEs nominated a surrogate parent entity (SPE) in countries effective CbC MCAA with Thailand to file the CbC Reporting, they would not require local filing by Thai entities of the USA-headquartered MNEs. If this is not the case, the Thai Revenue Department (TRD) will send a written notice to Thai entities of the MNE group requesting them to electronically submit the CbC Reporting (XML schema) to the TRD within 60 days of receiving the written notice.
Thailand's current activation status for CbC MCAA
Thailand has activated its CbC MCAA with many countries, effective for taxable periods starting on or after 1 January 2023. As of 19 April 2023, the OECD's website shows that Thailand can receive information from 54 countries, while 43 can receive data from Thailand. Thailand is also making bilateral agreements with the USA separately to allow for the exchange of information, including CbC Reporting, in the future.
Our notable points
We foresee future development of the CbC MCAA, such as updates to the agreement, increased participation, and a greater emphasis on tax transparency and cooperation among tax authorities. The CbC MCAA will likely play an increasingly important role in the global tax landscape.