cbcr-overview-and-comparison-of-initiatives-latest

Country-by-
Country Reporting
An overview and comparison of initiatives
—
April 2023
Contents
Extractive Industries Transparency
1 Introduction 03 9 Initiative (EITI)
39
Country-by-Country Reporting and transfer

2 pricing documentation (OECD BEPS Action 13)
07 10 Global Reporting Initiative — GRI 42
3 EU Public Country-by-Country Reporting 14 11 Australia Public Country-by-Country Reporting 49
Capital Requirements Directive IV (public

4 reporting for the financial services sector)
21 12 Comparison of data requirements 51
EU Accounting Directive: Chapter 10 (public

5 reporting for the extractives and logging sectors)
25 13 Comparison of legislative requirements 53
US Proposal on Public Country-by-Country

6 Reporting
29 14 KPMG’s ESG tax transparency offering 57
7 FASB Income Taxes disclosure proposal 31 15 Sources 59
8 Dodd Frank Act: Section 1504 33 16 Contacts 61
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Document Classification: KPMG Public 2
01
Introduction
Introduction
Content
• There are now a number of frameworks, both legislative and - Extractive Industries Transparency Initiative (EITI).
voluntary, that have been implemented or are being considered
for implementation. Initially these focused on the financial and - Global Reporting Initiative (GRI) Standard 207.
extractives sectors, but other initiatives impact on all industries
and sectors. - Australia Public Country-by-Country Reporting Proposal.
• The initiatives discussed in this paper cover: • This paper provides a brief introduction into the different reporting
requirements, current status and some of the issues to be
- Action 13 of the OECD’s BEPS (Base Erosion and Profit considered. The key requirements of the legislative frameworks
Shifting) Action Plan regarding Country-by-Country reporting are summarized into a table for comparison on page 51. The
and transfer pricing documentation. paper is based on our understanding of the key requirements as
at April 2023 and should not be taken to be comprehensive. It will
- EU Public Country-by-Country Reporting. be updated periodically as and when there are any new
developments.
- Capital Requirements Directive IV (CRD IV).
- EU Accounting Directive: Chapter 10.
- US Proposal on Public Country-by-Country Reporting.
- FASB Income Taxes disclosure proposal.
- Dodd Frank Act: Section 1504.
Introduction
Challenges
• Public country-by-country reporting was initially focused on a few • The tax transparency debate is constantly evolving and
specific sectors, but with the imposition of new requirements from companies should be actively involved in shaping this debate, as
the OECD, the EU initiatives and public interest in multinationals’ well as keeping abreast of initiatives and how this may impact
cross-border tax affairs, this is now a pressing issue for all them.
qualifying multinationals.
• With environmental, social and governance (ESG) rising on
• Companies need to consider the level of resources and costs leadership agendas globally, tax practices and governance are
involved in gathering the data, the ease of collecting the right becoming critical ESG measures, with tax transparency often
data, potential system changes and how technology can assist. being used as a key metric for demonstrating a responsible
Consideration should be given to whether a form of assurance attitude towards tax. One thing that has become clear, however, is
over the process is appropriate given the potential uses of the that not all businesses are at the same point in their tax
data both by tax authorities and the public. transparency journey and not all have the same tax transparency
destination.
• Providing an accompanying narrative and articulating the tax
position also assists in making the information as useful as
possible to the reader.
02
CbyC Reporting
(non-public) —
BEPS Action 13
CbyC Reporting (non-public) —BEPS Action 13
Introduction
On July 19, 2013 the OECD released an Action Plan on Base Erosion and Profit Shifting (BEPS). The Action Plan covered 15 specific Actions.
Action 13 focuses on a company’s global value chain and transfer pricing policy and documentation. It aims to introduce consistent documentation
and access to information to ensure all relevant tax authorities have access to the same information about a group's value chain and the resulting
tax consequences for the purposes of high level transfer pricing risk assessment.
The BEPS Action 13 report (Transfer Pricing Documentation and Country-by-Country Reporting), published on October 5, 2015, provides standards
for a three-tiered (Master File, Local File and Country-by-Country Report) standardized approach to transfer pricing documentation. For the purpose
of facilitating implementation, BEPS Action 13 includes a CbyC Reporting Implementation Package, which consists of model legislation — that could
be used by countries to require the ultimate parent entity of an MNE group to file the CbyC Report in its jurisdiction of residence, and three model
Competent Authority Agreements (CAA) that could be used to facilitate implementation of the exchange of CbyC Reports, based on the Multilateral
Convention on Administrative Assistance in Tax Matters (MCAA), bilateral tax conventions or Tax Information Exchange Agreements (TIEAs),
respectively.
The CbyC Reporting requirements has been implemented for fiscal years beginning on or after January 1, 2016, and annual CbyC reporting is a
BEPS “minimum standard” and shall be implemented by all Inclusive Framework countries.
In February 2020, the OECD launched a public consultation process seeking input from stakeholders in conducting the 2020 review. The public
consultation ended and the review work is still ongoing to account for the changes coming out of Two Pillar Global Reform. The outcome is expected
to be published in 2023.
According to the OECD, as of October 2022, over 100 jurisdictions had introduced a CbyC reporting obligation, and over 3,300 relationships were in
place for the exchange of CbyC reports between jurisdictions.
Timeline
The key dates in relation to Action 13 are:
• October 2015 — Transfer Pricing Documentation and Country-by-Country Reporting, Action 13 —

2015 Final Report
• September 2017 — Country-by-Country Reporting: Handbook on Effective Implementation
• September 2017 — Country-by-Country Reporting: Handbook on Effective Tax Risk Assessment
• April 2017 — Guidance on the Implementation of CbyC Reporting (updated as of December

2019)
• September 2017 — Guidance on the Appropriate Use of Information Contained in CbyC Reports
• May 2018 — Country-by-Country Reporting — Compilation of Peer Review Report.

Subsequently, yearly update reports have been issued. The last report was released in October
2022
• November 2019 — OECD publishes a list of common errors made by MNEs in preparing
Country-by-Country reports
• May 2020 — Review of Country-by-Country Reporting Consultation (ongoing)
Reporting requirements
Table 1 — CbyC template to include on a tax Table 2 —should list for each tax
jurisdiction basis: jurisdiction (i.e. country):
• Revenues (split between related party and unrelated party). • Name of constituent entities resident in each tax jurisdiction.
• Profit (loss) before income tax. • Tax jurisdiction of incorporation if different from tax jurisdiction of tax
residence.
• Income tax paid.
• Main business activities for each constituent entity from a pre-
• Income tax accrued — current year. defined list of options.
• Stated capital.
Table 3
• Accumulated earnings.
• “Disclosures” should include any further brief information or
• Number of employees.
explanation considered necessary by the reporting entity or that
• Tangible assets other than cash and cash equivalents. would facilitate the understanding of the compulsory information
provided in the CbyC report.
Some key considerations
Recognizing that groups have different financial systems, accounting policies and approaches to tax
management and reporting, the OECD have allowed flexibility in the source of data. Although a consistent
Sources of data approach should be followed as between entities and countries, as well as year on year, changes can be
made if the reasons and implications for this are explained. Groups will need to determine the best
approach for them and consider the implications of using group versus local GAAP.
The template requires data to be disclosed on an aggregated country basis, rather than an entity level,
Entity versus country which was originally proposed. Groups may nevertheless need to gather data entity by entity and then
level reporting aggregate it to produce the country level data .
Entities that are included within the consolidated group for financial reporting purposes should be included
in the template. This may simplify the process of determining how to treat joint ventures and minority
interests (addressed in the guidance).
Scope
Clarity has been provided that ‘any separate business’ is in scope of the rules including trusts and
partnerships if they are part of the consolidated group for financial reporting purposes.
The OECD have provided guidance on what should be included for each piece of data although this is
deliberately high level. There is an expectation of consistency in application across the data points, across
Data Definitions countries, and over time. It is worth investing time up front to determine how to interpret the guidance for
your group, agree on the assumptions you are going to make and documenting these to ensure consistent
application and retain support for the final filing. The source of data should be disclosed in Table 3.
Independent Independent contractors may be included where they are ‘participating in ordinary operating activities’.
contractors Groups will need to consider what this means for their business and the most appropriate reporting.
There is no formal requirement for reconciliation to group financial statements or local filings. However
groups should consider whether it is appropriate to do this for internal control purposes, and to have the
Reconciliation relevant facts should local administrations raise queries. Use of the CbyC report in the BEPS 2.0 Pillar 2
Transitional Safe Harbor calculations has put extra pressure on companies to ensure that their data is
accurate.
The CbyC report should be filed with the tax authority of the ultimate parent entity’s country, which will then
share this automatically with countries where the MNE has a taxable presence, provided that a Competent
Filing mechanism Authority Agreement is in place and certain conditions are met regarding confidentiality, consistency and
appropriate use.
The OECD has recommended a ‘big picture’ approach to documentation. It has outlined a three-tiered
structure: in addition to the CbyC Report, a ‘Master File’ (MF) contains high-level information regarding the
MNE’s global business operations and transfer pricing policies (it should be available to all relevant tax
administrations) and a ‘Local File’ (LF) specific to each country that should identify material related party
transactions, the amounts involved in those transactions, and the company’s analysis of the transfer pricing
determinations made with regard to those transactions.
The MF focuses on value drivers of business profit; companies will need to elaborate on the group’s five
largest products and/or service offerings.
Groups will need to consider the format and approach for the MF, and how they leverage existing
Transfer Pricing documentation to produce it. As the file will be shared with multiple tax authorities, it is essential that it is
Documentation succinct, clear and consistent with existing public information about the company.
The intention is that both the MF and LF should be filed directly with the tax administrations in each
relevant jurisdiction.
Some countries require the LF and/or MF to be filed with the corporate income tax return, some require
filing of the LF and/or MF within the same deadlines as those applicable for the corporate income tax
return, while others provide time for companies to prepare once requested by the tax authority.
Notably, only the CbyC Report is a BEPS minimum standard (i.e. all BEPS Inclusive Framework members
are expected to implement the requirement). It therefore remains up to the individual countries whether or
not to implement MF and LF requirements.
03
EU Public Country-by-
Country Reporting
EU Public Country-by-Country Reporting
Introduction Timeline
Following a proposal put forward by the European Commission in April Entry into force: December 21, 2021.
2016 and lengthy negotiations among Member States, as well as
between the Council of the EU and the European Parliament, the EU EU Member States have until June 22, 2023 to transpose the Directive
adopted the Public Country-by-Country Reporting Directive on November into domestic legislation.
24, 2021¹.
The rules will apply, at the latest, from the commencement date of the
The Directive requires multinational groups operating in the EU and that first financial year starting on or after June 22, 2024.
exceed certain size thresholds to publish certain information on their tax
affairs largely based on the reporting requirements under BEPS Action In-scope groups will have 12 months after the end of the balance sheet
13, with some changes. date of the relevant financial year to publish the report on income tax
information. For example, for calendar year taxpayers, the first reporting
The European Commission was tasked to design and publish a common year will be financial year 2025 and the report will be due by the end of
template and electronic reporting formats. The forms are expected to be December 2026.
adopted by the Commission on the third quarter of 2024.
However, individual Member States can opt for an earlier transposition
and earlier reporting (e.g. six months from the end of the balance sheet
date).
¹ Council Directive (EU) 2021/2101, amending the Accounting Directive 2013/34/EU.
Who does it affect?
The Directive applies to MNEs with total consolidated revenues exceeding EUR 750 million for each of the last two consecutive financial years, if the if
the group’s ultimate parent undertaking is either:
• Based in the EU, or
• Based in a third-country and operates in the EU through a qualifying subsidiary or branch¹.
The disclosure obligation will also apply to EU entities that are not part of a group (i.e. standalone undertakings) that meet the size threshold. However,
the rules do not apply to standalone undertakings or groups (including their branches) that are established or have their fixed place of business or
permanent business activity in a single Member State.
The Directive includes a provision aimed at avoiding double reporting for the banking sector. Ultimate parent companies and standalone entities subject
to CRD IV are exempted from the scope of the EU Public CbyC rules provided that the report made public based on CRD IV covers all activities
performed by the entity and by the affiliated undertakings included in their consolidated financial statements. EU-parented banks are already within the
scope of CRD IV and would be exempted from the EU public CbyC reporting provided their existing disclosure covers all of the entities included in their
consolidated financial statement. However, non-EU parented banks operating in the EU would not benefit from the exemption.
The Directive does not provide for an exemption for entities that are subject to the reporting requirements under Chapter 10 (extractive industry).
¹A qualifying EU presence is defined in accordance with Article 3 of the Directive 2013/34/EU and includes:
• Medium-sized or large subsidiaries that meet two of the following three conditions: a balance sheet greater than EUR 4 million, net turnover greater than EUR 8 million, or an average number of employees exceeding 50
• Branches which exceed the turnover threshold above (i.e. EUR 8 million) for each of the last two consecutive financial years.
Member States are nevertheless allowed to increase the limits above, up to EUR 6,000,000 for the balance sheet total and EUR 12,000,000 for the net turnover. In addition, the thresholds are periodically updated to keep pace
with inflation.
Disclosure requirements
For EU parented groups: For non-EU parented groups:

• The disclosure obligation lies with the EU • The main rule is that each of the qualifying EU subsidiaries or EU branches is required to
parent. Reports must be filed in publicly disclose information for the in-scope group. EU subsidiaries and branches that do not have
accessible commercial registers in the access to the required information at group level will need to ask the non-EU parent to
relevant Member State as well as on provide the data required to enable them to meet their obligations in the EU.
applicable group websites (unless Member
States opted for the publication exemption • If the parent does not provide all the required information, the subsidiary or branch will be
option described in the next slides). required to publish the report based on all the information it possesses and a statement
indicating that its parent did not make the necessary information available.
• There is one exception to this rule, whereby the EU subsidiaries and branches of the non-
EU headquartered group are exempt from their obligations if the non-EU parent has
published the report on their website and has assigned one of the EU subsidiaries or
branches to file the report with their national commercial registry.
There is a mandatory requirement that auditors check and state whether a company falls
within scope and whether the report was published. Under the EU Directive, the auditor will
not be required to provide assurance on the content of the report.
What to report
• A brief description of activities.
• Number of full time equivalent employees
• Revenue (including related-party revenue)¹.
• Profit or loss before income tax.
• Income tax accrued (current year).
• Income tax paid (cash basis).
• Amount of accumulated earnings
The information must be broken down for each EU Member State where the group is active and also for each jurisdiction deemed “non-cooperative” by
the EU (Annex 1 of the EU list of non-cooperative jurisdictions) or that has been on the “grey” list (Annex 2) list for a minimum of two years. Information
concerning all other jurisdictions is reported on an aggregated “rest of the world” (ROW) basis.
The European Commission will develop a common template and electronic reporting formats machine-readable (expected in the third quarter of 2024).
¹Revenue is defined as net turnover less dividends received from affiliated parties or income as defined under the relevant financial reporting framework (excluding value adjustments and dividends received from
affiliated parties).
Key challenges
Differing country implementation
Member States are left with a number of choices with respect to domestic implementation of the Directive:
• Use of the so-called “safeguard clause”: Member States can choose to allow in-scope groups to defer the disclosure of commercially sensitive
information for a maximum of five years – with the exception of data related to jurisdictions on the EU list of non-cooperative jurisdictions (Annexes I
and II);
• Website publication exemption: Member States may opt to exempt companies from publishing the report on their websites, if the report is already
made publicly available to any third party located in the EU, free of charge, on the website of a commercial registry.
Even more, the Directive is a minimum standard, and Member States may expand the scope of the Directive by, for example, requiring additional data
points.
These different options and potential scope extensions will impact in particular non-EU headquartered groups, which generally have reporting
obligations in each country where they have a qualifying presence. Such MNEs therefore need to consider how to achieve a consistent disclosure for
each country and monitor developments in each EU jurisdiction. The Directive does not provide for priority rules when Member States make use of
different options or expand its scope. As it stands and absent specific implementation guidance from individual Member States, the choice for one
jurisdiction to give, for example, the option of a deferral of publication of certain data does not bind other EU jurisdictions.
Key challenges
Alignment with OECD CbyC requirements Alignment with other public CbyC requirements
The public CbyC reporting requirements are similar to the OECD CbyC rules, • Other countries in Europe (e.g. Norway, the UK) have also
but differences appear in respect to several data points: e.g. presentation of expressed an interest in introducing similar requirements.
net turnover (no split is required under the public CbyC between turnover from
third parties and those from related parties); no requirement to disclose • Outside Europe, Australia announced its intention to
tangible assets and stated capital under the public rules. introduce public CbyC reporting rules for MNE beginning
July 1, 2023, requirements expected to be broader than the
Another difference compared to OECD CbyC reporting refers to the way in EU rules. In the US, it was reported that the Financial
which the information is presented. In particular the public CbyC rules require Accounting Standards Board plans to require MNEs to
data to be provided on a aggregated basis for ROW countries (with the provide a break-down of income taxes paid in the material
exceptions listed on the previous slides), whilst private CbyC reports present jurisdictions in which the group is active.
the information separately for each jurisdiction in which the group operates.
• These developments are signaling an accelerated timeline
MNEs need to determine if current tax reporting systems can be aligned to for companies to be ready to report their tax payments.
produce information that complies with both private and public CbyC reporting
requirements and identify where gaps need to be filled.
04
Capital
Requirements
Directive IV
Capital Requirements Directive IV
Introduction Key challenges
The Capital Requirements Directive IV (CRD IV) – Directive Differing country implementation
2013/36/EU – brings in transparency rules for EU institutions. CRD IV
has introduced a requirement for institutions to disclose a number of Some countries have interpreted legislation in different ways, for
data points, on a country-by-country basis. example regarding filing requirement for data where parent is
elsewhere, so groups need to consider how they achieve a consistent
disclosure for each country.
Timing
Recognizing wider contribution
The first year report relating to the most recent accounting period
The disclosure requirements for tax are limited to corporate income
ending prior to July 1, 2014 required public reporting of name, nature
tax only, which is only one part of a company’s total tax contribution.
of activities, geographical location, turnover and number of employees
The legislation allows for disclosure of more information than required,
and in scope entities.
and so groups should consider their overall strategy and whether they
After the first year reporting period, institutions must disclose the want to pro-actively demonstrate their wider contribution and/or
following additional items: profit or loss before tax, tax on profit or loss include narrative related to the information disclosed.
and public subsidies received.
Alignment with OECD CbyC requirements
The ongoing reporting deadline is December 31 each year (starting
The CRD IV reporting requirements are similar to the OECD
December 31, 2015) and disclosures should relate to the most
requirement, but only apply to regulated entities and have less data
recently ended accounting period prior to the reporting deadline.
points, so institutions need to ensure data is consistent in each report,
and that they create an efficient single compliance process to manage
both obligations.
Who does it affect? Key challenges
CRD IV prescribes country-by-country reporting for‘institutions’. What needs to be reported
Institutions are defined as credit institutions and investment firms.
Credit institutions are defined as 'a business whose undertaking is to CRD IV requires credit institutions and investment firms to report the
receive deposits or other repayable funds from the public and to grant following information by Member State and third countries in which
credits for its own account'. This includes all banks. Investment firms they have an establishment, on a consolidated basis:
are ‘any person whose regular occupation or business is the provision
of one or more investment services to third parties and/or the a) Nature of activities and geographical location.
performance of one or more investment activities on a professional
b) Turnover.
basis’. Broadly, this excludes firms which are not permitted to hold
client money. c) Number of employees (on a full time equivalent basis).
d) Profit or loss before tax.
Disclosure requirements e) Tax on profit or loss.
f) Public subsidies received.

CRD IV does not provide a template for disclosures and does not
allocate responsibility for providing such a template to any particular
organization. Institutions have determined their own approach to
disclosure, based on common practice reporting.
Key challenges (Continued)
When is reporting required
• Items a to c had to be publicly reported by all institutions on

July 1, 2014.
• In addition items d to f needed to be provided to the European

Commission confidentially by Global Systematically Important
Institutions (GSIIs) by July 1, 2014.
• By December 31, 2015, annual reporting of items a to f was

required by all institutions.
• The information should be published (if possible) as an annex to the

annual financial statements or, where applicable, to the
consolidated financial statements of the institution and must be
audited.
05
EU Accounting
Directive:
Chapter 10
EU Accounting Directive: Chapter 10
Introduction Status
In July 2013 a Directive on the annual financial statements, Member States issued laws to enforce its application and reporting had
consolidated financial statements and related reports of certain types to begin for financial years commencing on or after January 1, 2016 at
of undertakings was approved by the European Parliament. This piece the latest.
of legislation follows on from the Dodd Frank Act Section 1504
legislation in the US, and requires large undertakings and all public- Under EU rules, listed and large non-listed companies that are active in
interest entities active in the extractive industry or the logging of the oil, gas, mining or logging sectors have specific reporting
primary forests, to prepare and make public a report on payments obligations.
made to governments on an annual basis.
They must report all payments to governments broken down by country.
They must also report by project if these payments have been attributed
Timing to a specific project.
Companies in scope are required to publish the report no later than 11

months in after the end of their financial year by filing electronically
with their local trade register.
Who does it affect? What does it require?
Large undertakings and public-interest entities in the EU, with an The disclosure of all payments to governments in individual and
activity involving exploration, prospection, development and extraction consolidated reports.
of minerals or oil and gas, or the logging of primary forests.
The reports are part of a company’s annual financial reporting
In addition, the rules will apply to many foreign-resident groups that obligations and shall be published as laid down by the laws of each
are listed on an EU stock exchange. Member State.
The definition of large is determined by meeting two of three criteria in Where the parent of a subsidiary is located in a Member State, and
relation to balance sheet total, turnover or average number of that subsidiaries payment is included in a consolidated report by the
employees. parent, the subsidiary is relieved from its reporting obligations.
Public interest entity refers to entities with transferable shares listed

on a regulated market in the EU, certain credit institutions and certain
insurance institutions.
Disclosure requirements Reporting requirements
• All single or series of payments over EUR 100,000 within a financial Payments (amount paid whether in money or in kind) to be disclosed
year.
• Production entitlements.
• The total payments made to each government.
• Taxes levied on the income, production or profits of companies,
• For each type of payment, the total amount of payments made per excluding taxes levied on consumption such as value added taxes,
project. personal income taxes or
sales taxes.
• Payments in kind need to be reported in value or in volume.
• Royalties.
• This will be on a consolidated level where the parent has an
obligation to prepare consolidated financial statements. • Dividends.
• Signature, discovery and production bonuses.
• License fees, rental fees, entry fees and other considerations for
licenses and/or concessions.
• Payments for infrastructure improvements.
06
US proposal on Public
Country-by-Country
Reporting
U.S. Public CbyC Reporting proposal:
Disclosure of tax havens and offshoring act
Two separate proposals have been introduced Key public information: revenue (with both
over the last several years: related and unrelated parties), PBIT, tax
paid/accrued, stated capital, accumulated
• Disclosure of Tax Havens and Offshoring Act
earnings, full time employees and tangible
assets SEC registrants
• Stop Tax Haven Abuse Act
would be required
to publicly disclose
online their CbyC
Reports
Information on a country-by-country basis presented in an

Closely aligned with BEPS Action 13 aggregated or consolidated form
State of play Next steps
Bicameral legislation reintroduced on May • Bill must be considered and passed by the Senate and signed by the President to be adopted.
11, 2021 and passed by the House of
Representatives on June 16, 2021 • At this time, it seems unlikely that the Bill will get signed into law in the immediate future.
07
FASB Income Taxes
disclosure proposal
FASB income taxes disclosure proposal
Highlights and Status Next Step
On March 15, 2023, the Financial Accounting Standard Board (FASB) A consultation period runs until May 30, 2023.
released a proposal that would require entities to disclose more FASB is expected to deliberate issues identified in submitted
information about the income taxes they incur around the globe. comments and then determine whether it should proceed with the
The proposed amendments would, in part, require entities to disclose: issuance of a final rule. While the timing is uncertain, it is possible a
final rule could be issued before the end of 2023.
• For public business entities, a tabular effective tax rate
reconciliation, broken out into specific categories with certain
reconciling items above a 5% threshold further broken out by nature
and/or jurisdiction.
• For other entities, the nature and effect of significant differences
between the statutory tax rate and the effective tax rate by specific
categories of reconciling items, including individual jurisdictions.
• Income taxes paid (net of refunds received), broken out between
federal, state and foreign; and net amounts paid to an individual
jurisdiction that equals or exceeds 5% of the total.
If adopted, the proposed amendments would be applied
retrospectively to all prior periods presented in the financial
statements.
08
Dodd Frank Act:
Section 1504
Dodd Frank Act: Section 1504
Introduction
The Dodd-Frank Wall Street Reform and Consumer Protection Act

of 2010 (Dodd- Frank Act) was signed into law by President
Obama on July 21, 2010 and primarily focuses on financial
regulatory reform.
Section 1504 of the Act concerns the reporting of financial

payments to governments and government agencies made for the
purpose of developing oil, gas and mineral reserves. The intent of
Section 1504 is to help combat global corruption and empower
citizens of resource-rich countries to hold their governments
accountable for the wealth generated by those resources, by
making resource extraction payments more transparent.
Section 1504 requires extractive companies listed on U.S. stock

exchanges to disclose, in an annual report, payments made to
governments for oil, gas and mining.
Status
The rules were first adopted by the SEC in August 2012, but were subsequently challenged in court and then vacated by the U.S. District Court for the
District of Columbia in July 2013 on two grounds. First, the SEC misread the statute to require the public filing of the payments disclosure to be made
by issuers. Second, the SEC’s failure to include an exemption in the 2012 Rules for countries that prohibit payment disclosure was “arbitrary and
capricious”.
In September 2014, Oxfam America filed a suit to compel the SEC to adopt new rules. Discussions have continued between the SEC and industry
representatives, and revised regulations were published by the SEC on December 11, 2015. The SEC adopted the proposed regulations as final in
June 2016 and the final rule and form amendment were effective 26 September 2016. However, the revised rules were disapproved by a joint resolution
of Congress pursuant to the Congressional Review Act (CRA) in 2017.
On December 16, 2020 the SEC adopted a third set of rules implementing Section 1504. The rules are intended both (1) to achieve the statutory
objective of increasing the transparency of payments to governments for the purpose of the commercial development of their oil, natural gas, and
minerals and (2) to comply with the CRA. The adopted rules will require a domestic or foreign reporting issuer to disclose payments made by the issuer
or a subsidiary or entity controlled by the issuer to the U.S. federal government or a foreign government if the issuer engages in the commercial
development of oil, natural gas, or minerals.
The final and amended rules from 2020 are effective March 16, 2021, and require compliance after two-year transition period.
On March 24, 2022, a bill to amend the Dodd Frank Act and repeal certain provisions requiring non-material disclosure was introduced in the U.S.
Senate. At this time, however, the bills passage into law seems unlikely.
Highlights
The final rules will, among other things:
• Require public disclosure of company-specific, project-level payment information;
• Define the term “project” to require disclosure at the national and major subnational political jurisdiction, as opposed to the contract, level,
recognizing that more granular contract-level disclosure could be used to satisfy the rule;
• Add two new conditional exemptions for situations in which a foreign law or a pre-existing contract prohibits the required disclosure;
• Add a conditional exemption for smaller reporting companies and emerging growth companies (but limit exemption to companies not subject to an
alternative reporting regime, which has been deemed by the commission to require disclosure that satisfies the transparency objectives of section
13(q));
• Define “control” to exclude entities or operations that an issuer only proportionately consolidates;
• Limit the liability for the required disclosure by deeming the payment information to be furnished to, but not filed with, the commission;
• Add relief for issuers that have recently completed their U.S. Initial public offerings; and
• Extend the deadline for furnishing the payment disclosures.
Who does it affect? What does it require?
Any company that is engaged in the commercial development of oil, Affected companies are required to submit annually their global
natural gas, or minerals, and is required to file annual reports with the payments to governments covering:
Securities and Exchange Commission (SEC) i.e., 10-K, 20-F or 40-F.
• The type and total amount of such payments made for each project
This includes a subsidiary of that company, or an entity under the of the resource extraction issuer relating to the commercial
control of the company. development of oil, natural gas or minerals, as well as the
currency used.
When? • The type and total amount of such payments made to each
government.
Annual deadline requires an issuer to submit Form SD no later than

270 days following the end of its most recently completed fiscal year.
Disclosure requirements Reporting requirements
An annual report must be filed on Form SD with the SEC, in XBRL Payments to be disclosed
format using specified electronic tagging as defined by the SEC.
• Taxes levied on corporate profits, corporate income, and
• De-minimis reporting requirement of USD 100,000 for one production, but will not be required to disclose payments for taxes
payment or a series of payments. levied on consumption, such as VAT, personal income taxes, or
sales taxes.
• The total payments to each government.
• Royalties (including unit-based, value-based, and profit-based),
• The total amount of payments made per project and business fees (such as; license, rental, and entry) and bonuses (including
segment. signature, discovery, and production bonuses).
• The payment disclosure must be made on a cash basis instead of • Dividends.
an accrual basis.
• Payments for infrastructure improvements.
• There is no audit requirement for the payment information.
• Community and social responsibility payments.
• Payments in kind must be reported at cost, or if not possible, at fair

market value (e.g., production entitlement payments and
infrastructure payments).
09
Extractive Industries
Transparency
Initiative (EITI)
Extractive Industries Transparency Initiative (EITI)
Introduction Who does it affect?
The Extractive Industries Transparency Initiative (EITI) is a voluntary Governments and extractives industry companies involved in
initiative launched in 2002, promoting public awareness of how exploration and production of oil, natural gas or minerals.
countries manage their oil, gas and mineral resources and is widely
viewed as the driver for global transparency for improving governance EITI is signed up voluntarily by countries, but once they sign up it
of natural resources in the extractives industry. requires that all companies and all government agencies making or
receiving material payments participate.
It is an international standard with a flexible methodology that is
voluntarily entered into by governments in order to reconcile payments
between the parties in developing nations. It is developed and What does it require?
overseen by a coalition of governments, companies, civil society,
investors and international organizations.
The framework provides guidance on the disclosure requirements, but
As of December 2022, 57 countries implemented the EITI standard. it is for the implementing country to define the details.
Over 60 of the world’s largest oil, gas and mining companies, 9 civil
Companies must report to the government running the EITI country
societies and 15 countries support the EITI.
program using the relevant template.
Country governments produce the report.
Reports are analyzed and reconciled by a third party, and then

published.
Extractive Industries Transparency Initiative (EITI)
Reporting requirements
Disclosure requirements Payments to be disclosed

• Companies disclose all material payments to government. • The host government’s production entitlement (such as profit oil).
• Governments disclose extractive industry revenues. • National state-owned company production entitlement.
• Materiality levels are set by the country multi-stakeholder group. • Profits taxes.
• Contextual information on the industry and country must be • Royalties.

provided in the report.
• Dividends.
• EITI compliant countries must make the reports publicly available.
• Bonuses, such as signature, discovery and production bonuses.
• License fees, rental fees, entry fees and other considerations for
licenses and/or concessions.
• Any other significant payments and material benefit to government.
The EITI standard has been updated in 2019 and is available on the EITI dedicated website.
10
Global Reporting
Initiative —GRI
Global Reporting Initiative —GRI
Introduction
Global Reporting Initiative (GRI) is an independent, international organization that provides

businesses and other organizations with the global common language to communicate their
impacts and take responsibility for those impacts.
The GRI standards are voluntary. However, certain international organizations (e.g. International
Council on Mining and Metals) have included compliance with the GRI standards in the
‘performance expectations’ of its members.
The GRI Tax Standard (GRI 207) was developed by an independent, multi-stakeholder expert
group, in recognition of the vital role that tax contributions have on sustainable development, and
in response to widespread stakeholder demands for tax transparency. The standard was
launched in December 2019 and is available for download in several key languages.
GRI 207 is the first and only globally applicable public reporting standard for tax transparency. It
sets expectations for disclosure of tax payments on a country-by-country basis, alongside tax
strategy and governance.
The disclosures in the GRI Standard are designed to help an organization understand and
communicate its management approach in relation to tax, and to report its revenue, tax, and
business activities on a country-by-country basis.
Status
The GRI Tax Standard is effective for reports or other materials published on or after January 1, 2021. Early adoption was encouraged.
Who does it affect? Disclosure requirements

The GRI Tax Standard can be used by an organization of any size, Once a company opts to report in accordance with GRI standards,
type, sector or geographic location that wants to report on its impacts they are required to make disclosures on all their material topics.
related to this topic. These topics are based on their impact on a variety of internal and
external stakeholders, financially and otherwise. From a sustainability
perspective, tax is always expected to be material regardless of the
tax footprint of a group, as taxes are considered to be important
to stakeholders.
This standard includes disclosures on the management approach and topic-specific disclosures. These are set out in the standard as follows:
• Management approach disclosures — narrative explanation of how an organization manages a material topic, the associated impacts, and
stakeholders’ reasonable expectations and interests.
- Disclosure 207–1 approach to tax — description of the approach to tax, including:
• Whether the organization has a tax strategy and, if so, a link to this strategy if publicly available
• The governance body or executive-level position within the organization that formally reviews and approves the tax strategy, and the
frequency of this review
• The approach to regulatory compliance
• How the approach to tax is linked to the business and sustainable development strategies of the organization.
- Disclosure 207–2 tax governance, control, and risk management — a description of the tax governance and control framework, including:
• The governance body or executive-level position within the organization accountable for compliance with the tax strategy
• How the approach to tax is embedded within the organization
• The approach to tax risks, including how risks are identified, managed, and monitored
• How compliance with the tax governance and control framework is evaluated.
- A description of the mechanisms for reporting concerns about unethical or unlawful behavior and the organization’s integrity in relation
to tax.
- A description of the assurance process for disclosures on tax and, if applicable, a reference to the assurance report, statement, or opinion.
- Disclosure 207–3 stakeholder engagement and management of concerns related to tax — a description of the approach to stakeholder
engagement and management of stakeholder concerns related to tax, including:
• The approach to engagement with tax authorities
• The approach to public policy advocacy on tax
• The processes for collecting and considering the views and concerns of stakeholders, including external stakeholders.
• Topic-specific disclosures
- Disclosure 207–4 country-by-country reporting — the reporting organization shall report the following information:
• All tax jurisdictions where the entities included in the organization’s audited consolidated financial statements, or in the financial information
filed on public record, are resident for tax purposes.
• For each tax jurisdiction reported in disclosure 207–4-a:
- Names of the resident entities.
- Primary activities of the organization.
- Number of employees, and the basis of calculation of this number.
- Revenues from third-party sales.
- Revenues from intra-group transactions with other tax jurisdictions.
- Profit/loss before tax.
- Tangible assets other than cash and cash equivalents.
- Corporate income tax paid on a cash basis.
- Corporate income tax accrued on profit/loss.
- Reasons for the difference between corporate income tax accrued on profit/loss and the tax due if the statutory tax rate is applied to
profit/loss before tax.
• The time period covered by the information reported in disclosure 207–4
11
Australia Public
Country-by-
Country Reporting
Australia Public CbyC Reporting
The Australian government announced in the federal budget on October 25,

2022 that it will introduce new public reporting requirements for
multinational companies to enhance the tax information they disclose to the
public, for income years commencing from July 1, 2023.
The government announced reforms in three areas:
• Large multinationals that are significant global entities (SGE) to prepare

for public release of certain tax information on a country-by-country basis
and a statement on their approach to taxation, for disclosure by the
Australian taxation office (ATO). A SGE is a global parent entity with an
annual global income of AUD1 billion or more; or any member of such a
global parent entity’s group;
• Australian public companies (listed and unlisted) to disclose information

on the number of subsidiaries and their country of tax domicile; and
• Tenderers for Australian government contracts worth more than AUD

200,000 to disclose their country of tax domicile (by supplying their
ultimate head entity’s country of tax residence).
On April 6, 2023, the Australian Treasury has published the related draft
legislation.
12
Comparison of data
requirements
Comparison of data requirements
Action 13 BEPS CbyC EU Public CbyC Capital The EU Accounting The Dodd Frank Global Reporting
Reporting Requirements Directive: Chapter 10 Act: Section 1504 Initiative
Directive IV
Basic Entity name    
information
Activities    
Geographical location/Tax jurisdiction    
Project name  
Receiving government  
Financial data Revenue    
Profit or loss before tax    
Tangible assets other than cash or cash  
equivalents
Stated capital 
Accumulated earnings  
Tax data Income taxes paid      
Current Income tax accrual   
Explain the difference between corporate income 
tax accrued and tax paid
Other data Public subsidies received 
Dividends  
Royalties  
License fees, rental fees, entry fees  
Signature, discovery and production bonuses  
Production entitlements  
Payments for infrastructure  
improvements
People data Number of employees    
13
Comparison of
legislative
requirements
Comparison of legislative requirements
OECD BEPS Action EU Public CbyC Reporting Capital Requirements The EU Accounting Directive: The Dodd Frank Act: Global Reporting Initiative
13 CbyC Reporting Directive IV Chapter 10 Section 1504 — GRI
Who is affected Multinational Enterprises MNEs with a consolidated group CRD IV applies country by Large undertakings and public interest SEC registered companies Voluntary use by
(MNEs) with a consolidated revenue in excess of EUR750 million country reporting to 'institutions‘ entities incorporated in the EU, active engaged in the commercial organizations irrespective of
group revenue in excess of which are either EU-parented or have in the EU. Institutions are in exploration, prospection, development of oil, natural size, type, sector or location.
EUR 750 million. qualifying EU subsidiaries or defined as credit institutions and development and extraction of minerals gas, or minerals.
branches. investment firms. or oil and gas, or logging of primary
forests.
In addition, it will apply to many
foreign-resident groups that are listed
on an EU stock exchange under the
FCA’s Disclosure and Transparency
Rules.
When does it come The final Action 13 Report Date of entry into force: December 21, Names and activities, turnover Reporting begins for financial years The final and amended rules Effective for reports or other
into effect regulations was published 2021. EU Member States have until and number of employees were commencing on or after January 1, from 2020 are effective materials published on or
on October 5, 2015. June 22, 2023 to transpose the initially reported on July 1, 2014 2016 at the latest. March 16, 2021 (and require after January 1, 2021.
The first period in scope is Directive into national law. Individual based on most recently compliance after two-year
accounting periods Member States may choose to available financial statement. transition period).
beginning on or after implement the rules at an earlier date. Subsequent full reporting is due Annual deadline requires an
January 1, 2016. The rules will apply 12 months after by December 31, each year issuer to submit Form SD no
the transposition deadline, i.e., from starting from December 31, later than 270 days following
the commencement date of the first 2015 relating to the most the end of its most recently
financial year starting on or after June recently ended accounting completed fiscal year.
22, 2024. For calendar year taxpayers, period.
the first reportable year will be 2025,
with the report due by the end of 2026.
Threshold Multinationals with Multinationals with consolidated group No threshold. Payments (singular or series) Payments (singular or “Tax” identified as a material
consolidated group revenues of more than EUR750 million exceeding EUR 100,000. series) exceeding topic.
revenues of more than (or local equivalent). USD 100,000.
EUR750 million (or local
equivalent).
Data aggregation • By country • By country (EU Member States • By country • By country • By country • By country
and jurisdictions on the EU list of
non-cooperative jurisdictions • By institution • By project • By project
(Annex 1 or two years on Annex • By government • By government
2).
• Aggregated on single line for all
other territories.
Format of report Set template format Disclosure on company website(s) and In practice, this has been on Part of a company’s annual financial Form SD — Electronic filing Not specified.
and audit separate from tax return and country’s trade register. Common form institutions websites, with reporting obligations and shall be using XBRL.
requirement accounts. to be designed and published by the financial statements stating how published as laid down by the laws of
Commission. the requirement has been met. each Member State. No audit requirement.
Electronic filing likely using
XML. Auditor to confirm that required data Audit requirement. Audit requirements will be dependent
has been published, and published in on the Member State laws.
No audit requirement based the correct places.
on OECD
recommendations.
What needs to be • Constituent entities • Net Turnover • Institution name • Project name • Project name • Names of the resident
reported resident in tax • Profit/(Loss) before tax • Country • Name of receiving government • Name of receiving entities
jurisdiction government • Primary activities of the
• Income tax charge • Nature of activities and • Country of receiving government
• Tax jurisdiction of organization
Income tax paid geographical location Taxes levied on income, production • Country of receiving
incorporation if different • •
Tax on profit or loss or profits government • Number of employees,
from tax jurisdiction of Accumulated earnings •
•
Taxes levied on income, and the basis of
residence Profit or loss before tax Dividends •
• Number of employees
• •
production or profits calculation of this
• Activities by entity • Turnover • Royalties number
• Activities by country • Dividends
• Revenues (split • Number of employees • License fees, rental fees, entry fees • Revenues from third-
between related party • Royalties party sales
and unrelated party) • Public subsidies received • Production entitlements
• License fees, rental fees, • Revenues from intra-
• Earnings before income • Signature, discovery and entry fees group transactions with
tax production bonuses other tax jurisdictions
• Production entitlements
• Income tax paid • Payments for infrastructure • Profit/loss before tax
improvements • Signature, discovery and
(including WHT) production bonuses • Tangible assets other
• Current income tax • Payments for than cash and cash
charge infrastructure equivalents
• Stated capital improvements • Corporate income tax
paid on a cash basis
• Accumulated earnings
• Number of employees • Corporate income tax
accrued on profit/loss
• Tangible assets other
than cash and cash • Reasons for the
equivalents difference between
corporate income tax
accrued on profit/loss
and the tax due if the
statutory tax rate is
applied to profit/loss
before tax.
14
KPMG’s ESG tax
transparency
offering
KPMG’s ESG tax transparency offering
The tax transparency journey is different for everyone.
• It will depend on where you currently are, where you want/need to be and the resources available.
Assess Strategise Design Implement Monitor and report
ESG tax reviews & ESG tax gap analysis & Design improvements to Implement Tax transparency reporting:
benchmarking strategy for policies and governance improvements to Tax Impact Reporting
Benchmarking can be an efficient
improvements Refreshing group tax policies,
policies and governance Tax transparency disclosures will need
way to understand what the governance procedures and control to include quantitative and qualitative
Once the current position is New policies and procedures must
business is currently reporting mechanisms can improve practices to reporting in line with relevant reporting
understood, the tax function will be implemented across the group
compared to peers or sustainability help meet standards frameworks.
need to define its aspirations and effectively, if they are to showcase
standards.
formulate a long term strategy for • Update policies and practices in improvement and commitment. • Groups will need to decide what to
• Review existing tax policy improvement. light of identified tax risks disclose, in line with which standards
• Communicate new policies to
• Maturity assessment and gap • Harmonise policies/ strategies or principles
• Identify and review tax risks leadership and wider business
analysis of policies and (financial and non-financial) to across geographies / segments of • Assess what kind of data collection
• Perform controls testing to
strategies versus tax identify key gaps in the control a large group approach to take, either in-house or
ensure new processes are
transparency standards / peers. framework • Compare refreshed standards using specialist support. KPMG has
adequate to meet relevant
The KPMG Tax Transparency against peers and/or best practice developed a technology solution, Tax
• Conduct stakeholder governance requirements
Discovery Assessment or ESG disclosures Footprint Analyzer, to support
assessments related to the
Tax Assessment can help here clients with tax data extraction
identified risks • Design a communication strategy,
ensuring alignment between the tax • Determine appropriate reporting
KPMG's gap analysis tool Tax
policy, tax strategy and the format (sustainability report, separate
Control Room can help facilitate
sustainability/ESG strategy tax transparency report, online, etc.)
this service.
15
Sources
Sources
DIRECTIVE 2013/34/EU OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL on the
1 KPMG Tax Impact Navigating tax transparency - KPMG Global
5 EU Accounting annual financial statements, consolidated
Reporting (home.kpmg) Directive: Chapter 10 financial statements and related reports of
certain types of undertakings
BEPS Transfer Pricing Documentation and

Country-by-Country Reporting, Action 13 —
2 OECD BEPS Action 2015 Final Report
6 Dodd Frank Act U.S. SEC — Section 1504 Specialized
Plan 13 Guidance on the implementation of CbyC
Section 1504 Disclosures
Reporting
Directive 2021/2101 of the European

Public CbyC Parliament and of the Council amending Extractive Industries
3 Reporting Directive 2013/34/EU as regards disclosure of 7 Transparency EITI website
income tax information by certain undertakings
and branches
Initiative (EITI)
Directive 2013/36/EU of the European

Capital Parliament and of the Council of 26 June 2013
Global Reporting
4 Requirements on access to the activity of credit institutions 8 Initiative — GRI GRI website
Directive IV and the prudential supervision of credit
institutions and investment firms
15
Contacts
Contacts
Raluca Enache Sarah Norton
Associated Partner, Head of KPMG's Director, KPMG in the UK
EU Tax Centre sarah.norton@kpmg.co.uk
renache@kpmg.com
John DerOhanesian Jenny Wong

Country by Country Reporting ASPAC ESG and Tax Lead
Global Coordinating Lead Director, KPMG in Australia
Managing Director, KPMG in the U.S.
jywong@kpmg.com.au
jderohanesian@kpmg.com
Federica Porcari Ana Pușcaș

Manager, KPMG in the U.S. Manager, KPMG's EU Tax Centre
fporcari1@kpmg.com apuscas@kpmg.com
Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.
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clients. All rights reserved.
KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG
International”), each of which is a separate legal entity. KPMG International Limited is a private English company limited by
guarantee and does not provide services to clients. For more detail about our structure please visit home.kpmg/governance.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
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Country-by-

Country-by-Country Reporting and transfer

3 EU Public Country-by-Country Reporting 14 11 Australia Public Country-by-Country Reporting 49

Capital Requirements Directive IV (public

EU Accounting Directive: Chapter 10 (public

US Proposal on Public Country-by-Country

7 FASB Income Taxes disclosure proposal 31 15 Sources 59

8 Dodd Frank Act: Section 1504 33 16 Contacts 61

- EU Accounting Directive: Chapter 10.

- US Proposal on Public Country-by-Country Reporting.

- FASB Income Taxes disclosure proposal.

- Dodd Frank Act: Section 1504.

• October 2015 — Transfer Pricing Documentation and Country-by-Country Reporting, Action 13 —

• September 2017 — Country-by-Country Reporting: Handbook on Effective Implementation

• September 2017 — Country-by-Country Reporting: Handbook on Effective Tax Risk Assessment

• April 2017 — Guidance on the Implementation of CbyC Reporting (updated as of December

• May 2018 — Country-by-Country Reporting — Compilation of Peer Review Report.

• May 2020 — Review of Country-by-Country Reporting Consultation (ongoing)

¹ Council Directive (EU) 2021/2101, amending the Accounting Directive 2013/34/EU.

For EU parented groups: For non-EU parented groups:

• A brief description of activities.

• Number of full time equivalent employees

• Revenue (including related-party revenue)¹.

• Profit or loss before income tax.

• Income tax accrued (current year).

• Income tax paid (cash basis).

• Amount of accumulated earnings

Differing country implementation

d) Profit or loss before tax.

Disclosure requirements e) Tax on profit or loss.

f) Public subsidies received.

• Items a to c had to be publicly reported by all institutions on

• In addition items d to f needed to be provided to the European

• By December 31, 2015, annual reporting of items a to f was

• The information should be published (if possible) as an annex to the

Companies in scope are required to publish the report no later than 11

Public interest entity refers to entities with transferable shares listed

• Signature, discovery and production bonuses.

• Payments for infrastructure improvements.

Information on a country-by-country basis presented in an

State of play Next steps

The Dodd-Frank Wall Street Reform and Consumer Protection Act

Section 1504 of the Act concerns the reporting of financial

Section 1504 requires extractive companies listed on U.S. stock

The final rules will, among other things:

• Require public disclosure of company-specific, project-level payment information;

• Extend the deadline for furnishing the payment disclosures.

Annual deadline requires an issuer to submit Form SD no later than

• Payments in kind must be reported at cost, or if not possible, at fair

Country governments produce the report.

Reports are analyzed and reconciled by a third party, and then

Disclosure requirements Payments to be disclosed

• Contextual information on the industry and country must be • Royalties.

• Any other significant payments and material benefit to government.

Global Reporting Initiative (GRI) is an independent, international organization that provides

Who does it affect? Disclosure requirements

- Disclosure 207–1 approach to tax — description of the approach to tax, including:

• The approach to regulatory compliance

• How the approach to tax is embedded within the organization

• The approach to engagement with tax authorities