Recently, U.S. Treasury Deputy Assistant Secretary Robert Stack clarified Treasury’s position on a number of issues for the final Country-by-Country (C-b-C) regulations, which is to be completed by 30 June. According to Stack, Treasury positions on some outstanding issues include:

  • C-b-C reports will be due with the annual tax return, although Treasury is considering possible ways to allow C-b-C reports through amended returns;
  • Territories will be regarded as separate jurisdictions, although parent companies in territories may file with the IRS;
  • Partnerships will be considered “stateless” entities, which is a departure from the initial proposed regs, which included that partnership CBC items be flowed through to the partners; and
  • Intangibles and financial assets will not be included as fixed assets.

In addition, Stack outlined that Treasury fully expects to offer voluntary filing for fiscal years beginning before 1 July 2016 (planed effective date of US C-b-C regulations), but that voluntary filing will not be included in the final C-b-C regulations. According to Stack, the reason that voluntary filing will not be included is that negotiations are still ongoing with third jurisdictions to accept voluntarily filed C-b-C reports. It is unclear whether the negotiations involve the signing of bilateral competent authority agreements for the exchange of C-b-C reports. If voluntary reports are not accepted by third countries or the necessary bilateral agreements are not in place, the benefit of voluntary filing would be lost.

David van Wordragen

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