The OECD on 23 May 2025 issued a list of common errors multinational enterprise (MNE) groups make when preparing their country-by-country (CbC) reports under action 13 of the OECD/G20 BEPS project. The list includes 28 common recurring errors identified by tax administrations (and their correct treatment), as well as common errors concerning the use of invalid or prohibited characters in the CbC reporting XML schema.
As the OECD explains, CbC reports contain valuable information on the global allocation of income, taxes paid, and the location of economic activity among the tax jurisdictions in which an MNE group operates. This information can be used for a high-level transfer pricing risk assessment, the assessment of other BEPS-related risks, and economic and statistical analysis, if appropriate. However, the information can be used effectively only if the data included in the CbC reports is robust and accurate. In addition, CbC reports form the basis for determining whether an MNE is eligible for Pillar Two safe harbours.
The availability of Pillar Two safe harbours has increased the significance of CbC reports. To help alleviate the administrative burden that compliance with the Global Anti-Base Erosion (GloBE) rules might impose on MNEs, the OECD developed a temporary transitional CbC report safe harbour.
The transitional CbC report safe harbour is a temporary measure that allows an MNE to avoid undertaking detailed GloBE rules calculations for jurisdictions where it has constituent entities if it can demonstrate, based on its CbC report, that it meets one of the following three tests for those jurisdictions:
Thus, Pillar Two has made avoiding errors in CbC reports crucial to help an MNE group avail itself of a useful tool to facilitate compliance with Pillar Two through available safe harbours.
Laurie Dicker
BDO in United States
As the OECD explains, CbC reports contain valuable information on the global allocation of income, taxes paid, and the location of economic activity among the tax jurisdictions in which an MNE group operates. This information can be used for a high-level transfer pricing risk assessment, the assessment of other BEPS-related risks, and economic and statistical analysis, if appropriate. However, the information can be used effectively only if the data included in the CbC reports is robust and accurate. In addition, CbC reports form the basis for determining whether an MNE is eligible for Pillar Two safe harbours.
CbC Reports’ Heightened Importance
The availability of Pillar Two safe harbours has increased the significance of CbC reports. To help alleviate the administrative burden that compliance with the Global Anti-Base Erosion (GloBE) rules might impose on MNEs, the OECD developed a temporary transitional CbC report safe harbour.The transitional CbC report safe harbour is a temporary measure that allows an MNE to avoid undertaking detailed GloBE rules calculations for jurisdictions where it has constituent entities if it can demonstrate, based on its CbC report, that it meets one of the following three tests for those jurisdictions:
- The de minimis test – the MNE has CBC report revenue of less than EUR 10 million and profit and loss before income taxes below the de minimis threshold (EUR 1 million)
- The effective tax rate test – the effective tax rate for a jurisdiction equals or exceeds an agreed rate (16% for fiscal years beginning in 2025 and 17% in 2026)
- Routine profits test – the MNE has no excess profits in a jurisdiction after excluding routine profits
Thus, Pillar Two has made avoiding errors in CbC reports crucial to help an MNE group avail itself of a useful tool to facilitate compliance with Pillar Two through available safe harbours.
Laurie Dicker
BDO in United States