Importance of an Error-Free CbC Report
Country-by-country reports are crucial for tax administrations to assess risks related to Transfer Pricing and other tax-base erosion practices. Conversely, the OECD identified recurring errors made by multinational enterprises (MNEs) when preparing these reports, which reduces their usefulness and can 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 among tables: Present jurisdictions 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 with errors, resulting in additional costs, tax audits, and loss of credibility with tax authorities. These errors may also prevent the jurisdictions receiving the report from properly assessing risks.
OECD Recommendations
The OECD urges multinational groups to:
- Validate their reports with automated tools before filing.
- Avoid distorting rounding and respect the group’s functional currency.
- Ensure consistency among tables and declare all relevant entities.
- Verify XML coding and information on activities and data sources.
Is your Country-by-Country Report error-free? At TPC Group, we assist multinational companies in preparing CbC Reports according to OECD standards and avoiding common errors. Our team can review your documentation and ensure compliance 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.