OECD Flags CbC Reporting Errors – Global Tax Updates

Editorial Team – [2025] 174 taxmann.com 1193 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. OECD releases report on common errors by MNE groups in Country-by-Country reporting

The OECD has released a document outlining common errors by MNE groups in Country-by-Country (CbC) Reports. This covers 28 frequent errors noted by tax administrations and mistakes in using the CbC reporting XML schema.

Common errors in MNE groups’ Country-by-Country reports:

CbC reports offer crucial data on an MNE group’s global income allocation, taxes paid, and economic activity locations across tax jurisdictions. This is for high-level transfer pricing risk assessment, other BEPS-related risk assessments, and potentially economic/statistical analysis. Effective use depends on robust and accurate data in these reports.

Tax authorities have found numerous issues with CbC report data filed so far, with common ones detailed below. MNE groups under CbC reporting rules must review these and prevent their recurrence. This is especially important for missing or incorrect Tax Identification Numbers (TINs) in Table 2, which can severely impede effective data use by tax administrations.

To reduce these errors, tax administrations should share this document with taxpayers and advisors, ensuring they know that reports with these errors are incorrect and must be amended.

Tax administrations use various processes to find errors in filed CbC reports, such as:

• Automated checks when a CbC report is filed via the XML schema, blocking reports with certain errors (e.g., invalid TIN formats, duplicate TINs, improper “NOTIN” use).
• Post-filing, pre-exchange automated or manual checks.
• Post-exchange automated or manual checks by recipient jurisdictions.

If a tax administration finds errors in a filed CbC report (including those listed), whether through its own checks or when informed by a recipient jurisdiction, it must require the Reporting MNE to correct them.

Source – OECD report

2. Hong Kong enacts Global Minimum Tax Law

Hong Kong’s Legislative Council passed the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Bill 2024 on May 28, 2025. This new law, announced by the Inland Revenue Department, introduces a 15% global minimum tax, effective January 1, 2025, aligning with the OECD’s Pillar Two initiative.

The legislation incorporates the Income Inclusion Rule (IIR) and establishes a Hong Kong minimum top-up tax (HKMTT). While it also includes provisions for an Undertaxed Profits Rule (UTPR), the effective date for the UTPR remains flexible, acknowledging concerns raised by the United States regarding such taxes being “discriminatory.”

Source – Press Release

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