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Tax & AccountingJuly 11, 2022

Transparency through documentation and CbCR: What does the future hold?

Expert opinion

An overview of our involvement during panel discussion at TP Minds International.

I was fortunate to be part of a panel of Country-by-country tax experts at TP Minds International, where we discussed the challenges facing Transfer Pricing professionals. Our panel members had experience in different industries (including automotive, hotel and financial services), but we have all faced a common challenge: dealing with misconceptions about the companies we were advising or working for. We have had to ensure that tax authorities understand our organisation’s business model — for example, not the owner but franchisor, not limited risk distributor but principal, or the capital and regulatory requirements.

So, how you do tell the story of the business? I believe this is done through a clear and consistent narrative across all information presented: from the annual report, through to the notes to the statutory accounts and tax returns, and then the Country-by-Country Report and Master file and local files, and any information provided in the course of tax audits.

To ensure accurate transparency and mitigate the significant risk of inaccurate or incomplete disclosures, multinationals must deal with the collection of relevant and accurate data in a consistent format across the whole Group. Given the size, diversity and geographical spread of many multinationals, they must leverage the right technology to ensure they are equipped to comply with the Country-by-Country Reporting requirement.

The panel had different views on this — there isn’t always a technology solution to deal with the specific business requirements at the appropriate level of complexity and price. As a tax technology provider, I had a slightly different approach: start with the technology you have, analyse your specific needs, and weigh up whether to outsource or keep in-house, but I agreed that understanding the requirements is where we start. This is one of my favourite topics — taking a good look at the calculations required, getting together with the business to work out how to source the data, making sure the associated governance processes are in place, in summary, the data journey.

Technology like our cloud-based CCH Integrator Country-by-Country Reporting allows multinationals to streamline and automate their collection, consolidation, validation, and reporting processes to deliver lodgement-ready data. Collaboration is fostered by all stakeholders working together on a single data source, providing the visibility required to manage global tax risk better.

We do expect more changes in tax compliance and reporting obligations. Whatever the future, we can prepare for the resulting challenges by focusing on the data journey and the associated governance processes — something tax technology can help deliver.

Lucia Higgs
Consulting Services Manager, Enterprise Software, Wolters Kluwer
Based in London, Lucia is part of the global CCH Integrator team within Wolters Kluwer Tax and Accounting, which works with corporates and service firms to manage tax compliance, reporting responsibilities, and tax risk through digital transformation strategies and the use of tax technology.
CCH Integrator
Country-by-Country Reporting
An easily deployed and scalable solution for multiple tax jurisdictions, streamlining accurate and auditable reporting information preparation and disclosure to satisfy your BEPS Action 13 Obligations.
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