International tax information exchange extended
Another amendment to the Act on International Cooperation in Tax Administration is to introduce a new duty to share information about financial results, performed activities, staff numbers and many other indicators.
The government approved another amendment to Act No. 164/2013 Coll., on International Cooperation in Tax Administration, on 19 December, thus responding to the requirements of Council Directive (EU) 2016/881 of 25 May 2016 aiming to introduce the automatic exchange of information by countries (country-by-country reporting).
The amendment introduces new duties for multinational groups of companies with a consolidated turnover exceeding EUR 750 mil. The parent company of such a multinational must submit a country-by-country report providing extensive information about all group companies. The required data include, for example, generated revenues broken down into transactions with related and unrelated parties, the results of operations before taxation, paid income tax, current income tax payable, registered capital, number of employees, value of tangible fixed assets and other.
The Czech tax administration must know whether the country-by-country report will be submitted for a particular multinational and where. Consequently, the amendment introduces a duty to provide information about a group’s parent company and about who will file the report for the group and where. This notification should be provided to the Specialised Tax Authority electronically, using a prescribed form, before the end of the first reporting period. Where the first reporting period represents the calendar year of 2016, the notification must be filed before 31 December 2016. But as the amendment neither has been approved nor is yet effective, there is a transitional provision stipulating that notifications relating to any periods ending before 30 September 2017 must be provided by 30 September 2017. The notification should be filed only once with respect to the first reporting period. After that, it will be necessary to report only changes in information, always within 15 days of the date of a change.
Where a Czech company is the reporting entity for the entire group, it shall file the report with the Specialised Tax Authority, within 12 months from the last day of the reporting period. For 2016 as the first reporting period, this will be until 31 December 2017.
Should a Czech parent company not fulfil its reporting duty to the Specialised Tax Authority, a penalty of up to CZK 1.5 million may be imposed, as stipulated by the draft amendment. The current version of the amendment is expected to come into effect on 5 June 2017.