Taiwan CBCR Exchange Agreement: What You Need to Know
Taiwan has become the latest country to sign the Base Erosion and Profit Shifting (BEPS) Country-by-Country Reporting (CBCR) exchange agreement, joining over 80 other countries in the efforts to fight tax avoidance and profit shifting. The agreement was signed in September 2020 and is set to become effective from January 2021.
The signing of the Taiwan CBCR exchange agreement is a significant step forward in strengthening global tax transparency and cooperation. It is a crucial development for multinational companies operating in Taiwan, as it requires them to comply with the CBCR regulations and provides security to the government in ensuring that these companies are paying their fair share of taxes.
Here are some key things you need to know about the Taiwan CBCR exchange agreement:
What is CBCR?
CBCR is a reporting scheme that requires multinational companies to provide information on their operations, profits, and taxes paid in each country they do business in. This information is shared among the tax authorities of these countries, promoting transparency and facilitating the identification of profit shifting and tax evasion.
Why is the Taiwan CBCR Exchange Agreement important?
Taiwan`s accession to the CBCR exchange agreement means that it will begin exchanging CBCR reports with other countries from January 2021. This will enable Taiwan`s tax authorities to obtain valuable information on the operations of multinational companies, which will assist in ensuring compliance with tax regulations and reducing incidents of tax avoidance and profit shifting.
The agreement will also require Taiwanese multinational companies with a consolidated annual turnover of over TWD 27 billion (approx. USD 927 million) to submit CBCR reports to the Taiwan tax authorities. This will provide transparency and ensure that these companies are paying taxes in the countries they operate in.
Who is affected by the Taiwan CBCR Exchange Agreement?
The Taiwan CBCR exchange agreement applies to multinational companies with a presence in Taiwan or that are incorporated in Taiwan. It requires them to report their revenues, profits, taxes paid, and other relevant information on a country-by-country basis.
The reporting requirement applies to multinational companies with a consolidated annual turnover of over TWD 27 billion (approx. USD 927 million) for the accounting year beginning on or after January 1, 2018.
What are the reporting obligations under the Taiwan CBCR Exchange Agreement?
The Taiwan CBCR Exchange Agreement requires multinational companies to submit reports including information on the following:
– revenues earned from other countries
– profit (loss) before income tax paid
– the income tax paid
– the capital stock
– the number of employees
– business activities
The information collected through CBCR will enable tax authorities to identify businesses that are engaging in profit shifting and tax avoidance.
In conclusion, Taiwan`s accession to the CBCR exchange agreement is an essential step in improving global tax transparency and cooperation. The agreement will help to ensure that multinational companies operating in Taiwan comply with tax regulations and pay their fair share of taxes. It is important for businesses to understand their reporting obligations and take steps to comply with the requirements. Failure to comply with the regulations can result in penalties and reputational damage.