Country-by-Country Reporting (CbCR) is part of Action 13 of the OECD/G20 Action Plan on Base Erosion and Profit Shifting (BEPS). The Cayman Islands facilitated its implementation through the passage of the Tax Information Authority Law (the “Law”), Tax Information Authority (International Tax Compliance) (Country-By-Country Reporting) Regulations (the “Regulations”) and Country-By-Country Guidance (the “Guidance Notes”) (all of the foregoing, together, the “CBCR Regime”).
CbCR requires multinational enterprises (MNE) which meet certain criteria to file a country-by-country report (CbC Report) with tax administrations or tax authorities. The CbC Report provides a breakdown of the amount of revenue, profits, taxes and other indicators of economic activities for each tax jurisdiction in which the MNE group does business. CbCR only applies to MNE groups with annual consolidated group revenue of not less than a specified threshold amount in the preceding fiscal year (MNE Groups). The Cayman Islands has specified the threshold as US$850 million.
CbCR does not apply to Excluded MNE Groups. An Excluded MNE Group is a Group which does not meet the above-mentioned threshold. For this purpose, “Group” means a collection of enterprises related through ownership or control such that it is either required to prepare Consolidated Financial Statements for financial reporting purposes under applicable accounting principles or would be so required if equity interests in any of the enterprises were traded on a public securities exchange.
The Guidance Notes also make it clear that investment funds are not automatically exempt from the CBCR Regime. This is because applicable accounting rules may require an investment entity to consolidate with an investee entity. An investee entity, owned by an investment fund, may also control other entities such that, in combination with these other entities, it forms an MNE Group. In this case, and if the MNE Group exceeds the revenue threshold, it would need to comply with the requirement to file a CbC report.
All relevant materials regarding the CBCR Regime are available on the Tax Information Authority’s website
About The Author
Alric Lindsay is a Cayman Islands corporate/funds lawyer and an independent fund director approved by the Cayman Islands Monetary Authority and licensed under The Directors’ Registration and Licensing Law. Alric also acts as voluntary liquidator to Cayman Islands entities. Alric can be contacted at firstname.lastname@example.org