handbook-tb

Diane Ring(a) Accounting approach:(i) Whether the template should use bottom-up reporting— using local statutory accounts to build the file (thecurrent recommendation); or(ii) Whether the template should require/permit top-downallocation of the consolidated income of the groupamong the countries; and(iii) How the choice between the two would impact the calculationof compliance costs or the determination thatadditional requirements would be needed.To provide further clarity regarding the impact of these choicesand decisions, the draft reported that Working Party 6 (WP6)currently believes that if top-down reporting were adopted, itshould reflect the earnings and revenue from cross-borderrelated-party transactions, but should eliminate revenue andtransactions between related parties in the same country.(b) Burden and regulation: Is a requirement of consolidatedreporting within each country unduly burdensome on taxpayers?Under the top-down model of allocating the incomeof the MNE across countries, would additional guidance onappropriate sourcing, characterization of income, and allocationof deductions be required?(c) Taxes: Should withholding tax paid be reported? Wouldthat be particularly burdensome for taxpayers?(d) Cross-border related-party payments: Should there be aggregatereporting of related-party cross-border payments? Howdetailed should this be? Would it be a significant burden iftaxpayers were required to report intragroup interest, royaltiesand services fees?(e) Nature of business activities: Would any business sectorsrequire special treatment? Would this reporting be asignificant burden on taxpayers? Are there other types ofinformation for assessing economic activity that wouldbe useful?The information provided through the CbC template offerscountries the ability to assess the transfer pricing and base erosion risk514