The importance of an error-free CbC Report
Country by Country Reports (CbC Reports) are key tools for tax administrations to assess risks in transfer pricing and other practices linked to base erosion. However, the OECD has identified recurring errors made by multinational enterprises (MNEs) when preparing these reports, which reduces their usefulness and may lead to penalties.
Main errors detected
According to the OECD report of May 2025, the most common errors include:
- Poor tax identification: inclusion of incorrect codes, misuse of “NOTIN” or blank fields in Table 2.
- Formatting errors in Table 1: use of multiple currencies, rounded or abbreviated figures, and incorrect transposition of amounts.
- Inconsistencies between tables: jurisdictions present in one table and absent in another, or incorrect inclusion of unconsolidated entities.
- Technical errors in XML: use of prohibited characters such as “&” or “<,” which prevent automatic processing of the file.
- Lack of details on economic activities: incorrect or generic classification (“Other”) without further specification.
Consequences of these errors
Tax administrations may reject or require corrections to CbC Reports containing errors, leading to additional costs, tax reviews, and loss of credibility with tax authorities. These errors may also prevent the receiving jurisdictions from properly assessing risks.
OECD recommendations
The OECD urges multinational groups to:
- Validate their reports with automated tools before submission.
- Avoid distorting rounding and respect the functional currency of the group.
- Ensure consistency between tables and declare all relevant entities.
- Verify XML coding and information on activities and data sources.
Are you sure your Country by Country Report is correct? At TPC Group, we help multinational companies prepare CbC Reports in accordance with OECD standards and avoid common errors. Our team can review your documentation and ensure that you comply with the requirements of each tax administration.
Source: OECD (May 2025). “Common errors made by MNE groups in preparing Country-by-Country reports.” Available at: http://oe.cd/cbcr.