COUNTRY-BY-COUNTRY REPORTING: SIGNIFICANT STEP IN ACHIEVING CROSSBORDER BUSINESS TRANSPARENCY

Multinational companies (MNCs) are producing a large part of global wealth. They are important actors on global economic and political scene. However, often a significant part of their profit is shifted from the source countries (without being taxed) to countries where it is going to be low or nill taxed. Using different arrangements, MNCs successfully avoid paying taxes making significant savings and profits. After breaking global economic and financial crisis which, besides all, has been caused with such behavior of MNCs, leaders of the most powerful world economies initiated the Project on base erosion and profit shifting (BEPS). BEPS is focused on the identification and finding solutions for the methods mostly used by MNCs to legally avoid taxes and minimize their global tax duties. Transfer pricing is one of the identified problems that should be resolved. Arrangements between related entities – members of MNC are often used for tax minimization. The solution for the transfer pricing problem proposed by Organization for economic cooperation and development (OECD) is an introduction in national tax legislation duty for MNCs to report on their business activities and financial transactions considering all countries where MNCs conduct business. In this paper author has shown and analyzed method recommended by OECD: country-by-country reporting, considering its importance for the nationals' and global tax revenues growth. This method leads to more transparent cross-border business, but also represents a challenge for the management of the companies and tax administrations.