Country-by-Country Reporting (CbCR) is essential for tax transparency and fairness in global business. As we approach the end of 2025, it is more than just a regulatory requirement; it helps tax authorities evaluate risk, prevent profit shifting, and ensure profits are taxed where economic activity happens.
What Is CbCR At a Glance
Under the OECD’s BEPS Action 13 minimum standard, large Multinational Enterprise (MNE) groups with consolidated revenues above a threshold must file a CbC report each year. That report divides the group’s operations by tax jurisdiction, disclosing for each:
-
Revenues and profits pre‑tax
-
Taxes paid and accrued
-
Number of employees and tangible assets
-
Stated capital, retained earnings, and other indicators
-
The nature of business activities carried out locally
Tax administrations then receive and share these reports through automatic exchange agreements, providing them with a more comprehensive picture of an MNE’s footprint across jurisdictions.
The 2025 Peer Review: A Milestone in Implementation
In September 2025, the OECD published its Compilation of 2025 Peer Review Reports on CbCR, marking the eighth annual review under the Action 13 standard.
This peer review evaluates three pillars of implementation across 142 jurisdictions:
-
Domestic legal and administrative frameworks
-
Exchange of information frameworks
-
Confidentiality and appropriate use safeguards
Some key findings from the 2025 review include:
-
Over 120 jurisdictions now have domestic CbCR rules in place.
-
22 jurisdictions were recommended to establish or finalize their legal/administrative frameworks.
-
101 jurisdictions have multilateral or bilateral competent authority agreements for the exchange of CbC reports.
-
89 jurisdictions provided sufficient transparency about measures ensuring “appropriate use” of the data.
-
Some gaps remain: confidentiality, consistency in use, and full adoption of exchange arrangements.
This peer review is not just symbolic; it underscores that CbCR is now deeply embedded in the global tax architecture, and jurisdictions are being held accountable for their implementation.
Why It Matters — The Case for CbCR in 2025
CbCR matters for multiple, interlocking reasons.
1. Countering Base Erosion & Profit Shifting (BEPS)
MNEs have long used tax havens and aggressive structuring to allocate profits where taxation is weakest, irrespective of where value is generated. CbCR complicates those strategies by giving tax authorities comparative data across jurisdictions. It forces transparency, making it harder to mask profit shifting.
2. Better Risk Assessment & Audit Targeting
With CbCR data in hand, tax authorities can identify anomalies, such as jurisdictions reporting high profits with few employees or minimal assets, and prioritize audits or inquiries accordingly. Rather than blanket audits, compliance becomes more intelligence-driven.
3. Leveling the Playing Field
CbCR helps prevent undercutting: jurisdictions that enforce strong tax regimes won’t be disadvantaged by others that tolerate aggressive tax avoidance. It also pressures weaker tax regimes to strengthen their rules or risk losing credibility.
4. Foundations for Minimum Tax & BEPS 2.0
CbCR plays a foundational role in the OECD/G20 two‑pillar solution (Pillar One and Pillar Two) and other international tax reforms. For example, the global minimum tax (Pillar Two) relies on knowledge about effective tax rates and profit allocation across jurisdictions — data that CbCR helps provide.
5. Stakeholder & Investor Expectations
Beyond tax authorities, investors, NGOs, and the public are increasingly demanding a demonstration of fair tax behavior. CbCR can inform ESG reporting and reputational due diligence: companies will increasingly be judged not only by profits, but also by how those profits are taxed.
Role of Tools & Platforms — e.g., TWC’s CbC Reporter
Having the reporting obligation is one thing; preparing and exchanging data across jurisdictions is another. Tools like Country-by-Country Reporter (by Trans World Compliance) help MNEs compile, validate, and transmit their CbC reports in compliance with various country requirements and exchange protocols.
Such platforms are increasingly necessary in 2025 because:
-
Multiple jurisdictions may have differing filing standards, timelines, and validation rules.
-
Consistency, data governance, and audit trails are crucial for withstanding scrutiny.
-
Automated exchange protocols require formatting, encryption, and metadata handling — tasks that are not trivial for large groups.
-
Integrations with tax and accounting systems help reduce manual errors and operational burden.
Using dedicated CbCR reporting tools helps companies stay ahead, remain audit-ready, and avoid penalties or reputational risks arising from non‑compliance.
Challenges & Risks Ahead
Even as CbCR reaches wider adoption, 2025 brings new stress points:
-
Data Quality & Comparability: Differences in accounting standards, definitions of “related party,” or intra‑group allocations may hamper meaningful comparison.
-
Confidentiality & Misuse: There is a risk of data leaks or misuse if jurisdictions don’t strictly enforce safeguards.
-
Administrative Burden: For some jurisdictions, the technical, legal, and systems burden of operationalizing exchange infrastructures remains substantial.
-
Uneven Implementation: Some jurisdictions lag, delaying or weakening their domestic CbCR regimes.
-
Evolving Tax Strategy: MNEs may reconfigure operations to shift away from reporting-prone structures (e.g., consolidations, IP migrations).
The 2025 peer review highlights some of these gaps — recommending improvements in confidentiality, consistent application, and full coverage.
Looking Forward: What MNEs & Tax Authorities Should Do
For MNEs:
-
Audit your internal reporting and data flows now; gaps in 2025 filings will be harder to rectify later.
-
Invest in robust CbCR tooling and governance processes (e.g., TWC’s Country-by-Country Reporter or equivalents).
-
Engage proactively with tax authorities: request guidance, confirm expectations, and seek clarity on the use of your data to ensure a smooth process.
-
Prepare for parallel scrutiny under BEPS 2.0 (Pillar Two) and related international tax reforms.
For Tax Authorities & Regulators:
-
Use CbCR data actively in risk profiling, rather than letting it sit dormant.
-
Harmonize definitions and align reporting expectations to prevent interpretational mismatch.
-
Strengthen confidentiality safeguards, protocols, and penalty regimes to discourage leaks or misuse.
-
Support capacity building: Some jurisdictions may benefit from technical assistance or system upgrades to enhance their capabilities.
Conclusion
CbCR has graduated from a novel reporting requirement into a foundational pillar of global tax transparency. With the OECD’s newly published peer review report confirming broad implementation and identifying remaining gaps, we see that the work is both mature and still evolving.
Transparency isn’t optional; it is the cornerstone of fair taxation. As firms and authorities alike move forward, the era of opaque profit shifting is increasingly coming to an end.
