With the Third Amendment to the Tax Administration Act, the Maldives Inland Revenue Authority (‘MIRA’) was granted the authority to regulate the submission of Country-by-Country Reports (CbCR) to the MIRA.
Accordingly, on 20 January 2021, the MIRA published the Country-by-Country Reporting Regulation which stipulates the rules governing the new reporting requirements imposed on Multinational Enterprises (‘MNEs’) resident in the Maldives.
What is a CbCR?
CbCR is part of the Base Erosion and Profit Shifting (BEPS) Action Plan 13 and it is considered as one of the four BEPS minimum standards. CbCR is implemented with the purpose of obtaining information on MNEs with respect to its global allocation of income, profit (loss), taxes paid, taxes accrued and economic activity in jurisdictions that the MNE operates in. The data obtained gives the tax authorities a clear view of the key elements of the financial statements by jurisdiction and it is believed to ease the tax risk assessment and assurance processes especially in the area of Transfer Pricing and BEPS.
Who needs to furnish a CbCR?
CbCR must be submitted by MNE Groups resident in the Maldives. Usually the requirement falls on the Ultimate Parent Entity (UPE) of the Group resident in the Maldives. However, subject to certain conditions, Constituent Entities resident in the Maldives may also be required to submit CbCr. Exemption is offered to MNE Groups with a consolidated group revenue less than EUR 750,000,000.
When is it required and in what format?
CbCR must be filed within 12 months from the last day of the Reporting Fiscal Year of the MNE Group (for Reporting Fiscal Years commencing from 1 January 2021).
The report must be filed in a format identical to the standard template set out on Annex 3 of Chapter 5 of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. As the group information is to be consolidated and presented as one report, it is vital that MNEs who are entailed to meet the reporting requirements prepare in advance.
The Regulation takes effect from 20 January 2021.