Updated Pillar 2 Modelling Tool – OECD CbC Data

Under BEPS Action 13, all large MNEs are required to prepare a country-by-country (CbC) report which is filed by the Ultimate Parent Entity (UPE) in its jurisdiction of tax residence.  This is then shared with tax administrations for use in high-level transfer pricing and BEPS risk assessments.

The CbC Report includes aggregate data of the MNE on the global allocation of income, profits, taxes paid, and economic activity among countries in which it operates. 

Our Modelling Tool takes the latest CbC source data and subjects it to a data manipulation process to provide a drill down into some of the key metrics and data sources that are relevant for Pillar Two, on a jurisdictional basis. 
The data is based on the latest OECD CbC data, covers over 2,500 jurisdictional combinations and includes:
  • Tangible Assets other than Cash
  • Total Revenues
  • Profit (Loss) before Income Tax
  • Income Tax Accrued – Current Year
  • Number of Entities
  • Number of Employees
  • Number of CbCRs
  • High level Effective Tax Rate
  • High Level Tangible Asset Carve-Out
The following should be noted:
  • The level of detail varies depending on the jurisdiction. Some jurisdictions provide for UPEs with entities in numerous jurisdiction (eg Switzerland which covers 143 jurisdictions) whilst others provide a more high-level analysis (eg Finland). This tool therefore replicates and filters the data provided by the relevant tax authorities. 
  • As the OECD notes care should be used is planning to carry out GloBE ETR calculations using the data for two key reasons. Firstly the tax expense is the current tax expense and doesn’t include deferred tax. Secondly, the treatment of intercompany dividends varies depending on the jurisdiction. Some jurisdictions exclude this from PBT whereas other do not.  There are also no other GloBE adjustments. 
  • In addition, the data is on a jurisdictional basis, and not on an MNE group basis. Therefore the figures do not take account of individual groups that may have low jurisdictional ETRs due to tax incentives etc. 
Nevertheless, the tool provides some extremely interesting insights, not least at potential substance-based income exclusion amounts. 

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