ATI-Country-by-Country Report support package: benefits for ATI Partner countries
Multinational enterprises (MNEs) have long utilised profit-shifting strategies to minimise tax liabilities, making it increasingly challenging for countries, especially developing countries, to collect adequate tax revenues. To address this challenge, an internationally agreed measures to counter base erosion and profit shifting (BEPS) requires large MNEs to prepare Country-by-Country Reporting (CbCR). The CbCR aims at enabling tax administrations to access aggregate data on the global allocation of income, profits, payment of taxes, and economic activity across jurisdictions where the MNEs operate. While CbCR has significant potential as a tool for improving tax transparency, many low and middle-income countries face obstacles to fully leverage it. This is due to several factors such as complex requirements for Exchange of Information, limited capacity within their tax administrations, and lack of awareness.
The Addis Tax Initiative (ATI) seeks to make a contribution in addressing to this issue with a comprehensive CbCR analysis package aimed at increasing transparency and enhancing tax collection from MNEs in its partner countries.
Bridging the gap: what the ATI CbCR analysis package offers and how it can benefit ATI members?
The ATI CbCR analysis package is a support package designed to assist partner countries in addressing challenges related to the implementation of CbCR and taxing MNEs. It includes multiple components:
- Training and capacity-building: These will encompass both virtual sessions and an in-person 3-day training taking place in Lusaka from 4/03/2025 to 06/03/2025. The aim of this component is to help tax officials understand, implement, and utilise country-by-country reports effectively.
- Access to critical data: The programme facilitates access to aggregated CbCR data and other sources of data, empowering tax authorities to detect profit-shifting patterns effectively.
- Guidance on data analysis and risk assessment: The initiative offers technical guidance on how to integrate CbCR analysis into existing tax frameworks and improve risk management processes.
The learning package combines online guidance, and assistance together with in-person training. Partner countries can participate by attending all or part of the meetings throughout the programme. The goal is to ensure tax administrations have enhanced knowledge of the actions needed for CbCR implementation, and a better grasp of the tools and best practices for the effective risk management of tax revenues from MNEs.
Access to global data is essential: without data, countries are at a significant disadvantage in taxing MNEs effectively.
In addition and through these activities, the ATI CbCR analysis package ensures that members will be equipped to overcome technical challenges, such as meeting data protection standards and gaining access to the necessary information.
Increasing transparency for fair taxation
The core objectives of the ATI CbCR analysis package are twofold: enhance knowledge about CbCR and provide access to critical data. By offering comprehensive training and empowering tax authorities, it helps developing countries align their tax systems with international standards.
Access to CbCR reports is essential for accurate tax assessments. Without this data, countries lack the tools to fairly tax MNEs and address profit-shifting practices. Through this initiative, the ATI ensures that partner countries are equipped with both the knowledge and resources to enforce fair taxation and promote accountability among MNEs.
Meeting members’ needs: CbCR and global commitments
The ATI CbCR analysis package was developed in direct response to the needs expressed by ATI partner countries during the General Assembly in Zambia in 2023. Profit shifting, identified as a key concern, was linked to the broader issue of illicit financial flows (IFFs). This initiative aims to enhance transparency by equipping tax authorities with access to crucial data and tools to effectively assess multinational activities within their jurisdictions.
This CbCR capacity building product aligns with the ATI Declaration 2025 and its Commitment 3, which seeks to combat IFFs and promote equity in taxation.
By improving the understanding and use of CbCR data, the ATI product also contributes to Commitment 1 of the ATI Declaration 2025, focused on increasing domestic revenue, by ensuring that tax administrations have a clear understanding of where taxes should be levied based on MNE activity.
When tax authorities see the complete picture, they know better how to collect the taxes owed.
Transparency is at the core of the ATI CbCR analysis package
The lack of access to data on the global allocation of income, profits, payment of taxes, and economic activity across jurisdictions previously allowed MNEs to deploy tax avoidance strategies, preventing countries from accurately assessing the taxes due, and enforcing compliance. The global implementation of CbCR in 2017, initiated by the OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS), was a significant milestone in improving tax transparency. This initiative was aimed at curbing tax avoidance by requiring large MNEs to report detailed financial information on a country-by-country basis. While this global standard gave many countries access to critical data, significant gaps remain, particularly for developing countries, which still face challenges in accessing and analysing these reports effectively.
What sets the ATI CbCR analysis package apart?
A unique feature of the ATI CbCR programme is its focus on analysing multinational behaviour from a regional perspective. While most initiatives examine MNE tax strategies at a global level, ATI’s approach emphasises how multinationals operate within specific regions and countries, providing tailored strategies to address tax avoidance.
This regional insight offers ATI partner countries more relevant, localised solutions to their challenges.
Most studies focus on the global behaviour of multinationals, but the ATI is looking at specific countries and regions. This regional perspective is not common and helps us provide tailored guidance to ATI partner countries on how to reduce tax avoidance.
Beneficiaries: strengthening tax authorities and beyond
The primary beneficiaries of the ATI CbCR analysis product are tax authorities in ATI partner countries. Tax officials, especially those involved in international taxation, transfer pricing, and exchange of information, gain insights and skills in essential data needed to assess and collect taxes owed by MNEs accurately.
Ministries of finance can also benefit from the product, as the data and insights support better fiscal policy-making and more effective revenue collection. Beyond governments, civil society organisations advocating for tax transparency will gain from the increased access to information. With improved transparency, these organisations can better monitor MNE behaviour and ensure they are held accountable for their tax obligations.
A step towards fairer taxation
The ATI CbCR analysis package aims to assist partner countries in addressing tax challenges associated with MNEs. By providing data insights, targeted training, and greater transparency, the initiative seeks to enhance the capacity of tax administrations to assess multinational operations more accurately and address profit-shifting practices.
This collaborative effort supports ATI partner countries in working towards their commitments to increase domestic revenue, promote fairness in international taxation, and contribute to reducing illicit financial flows.