Who in a US group actually files the country-by-country report?
The ultimate parent of the group files it: the entity at the top of the United States headquartered structure, not the largest operating company and not whichever entity has the strongest finance team. The obligation attaches to the group crossing a revenue test, so the first practical question is which entities are members of the group at all. That list is where the work sits. Dormant holding companies, partnerships, branches and entities acquired part way through the year each have to be placed in a jurisdiction or excluded for a stated reason. Once the population is settled, the report itself is a data exercise.
Does our Canadian subsidiary file Form 8975 as well?
No. The report is made once, by the group's ultimate parent, and the figures for the Canadian company appear inside it. What the Canadian entity may have of its own are local obligations: telling its own authority which entity is reporting for the group and where, and keeping its own transfer pricing documentation. Those are different filings with different dates. The thing worth planning around is that the Canadian authority will eventually see the group's own numbers for Canada through exchange between authorities, so the local file and the group report need to describe the same business.
What if group revenue is just under the reporting threshold?
Then the test is what you need to get right, rather than the report. It is a revenue test applied to the group as a whole, so it is settled by two decisions: which entities are in the group, and what counts as revenue for each of them. A group sitting close to the line should document both, because a year that crosses it brings a filing obligation and a year that does not should have a reason on file. We do not quote the threshold from memory. It is read off the rules for the year in question before any conclusion is given.
Which numbers go into the report for each country?
Revenue, profit, tax paid, employees and assets, jurisdiction by jurisdiction, for everywhere the group operates. The definitions are the difficulty rather than the collection. Employee counts drawn from a payroll system, a human resources platform and a set of statutory accounts will differ, and each is defensible on its own terms. What matters is that one basis is chosen, applied to every jurisdiction and recorded. The same goes for whether intercompany amounts sit in revenue. A report that is internally consistent and explained survives scrutiny better than one assembled quickly.
Will other tax authorities compare this with our local file?
Assume so. The report reaches the authorities in every jurisdiction the group operates in through exchange arrangements, so the group's own account of where its profit, people and assets sit lands on the desk of each of them. If a local transfer pricing file describes the functions in one country as routine while the report shows much of the profit there, the inconsistency is discovered by the authority rather than by the group. The practical consequence is that the report should be drafted by whoever understands the transfer pricing story, not filed as a standalone data return.
Our parent is Canadian, so do we file this US form?
The form belongs to the ultimate parent of a United States headquartered group, so a group topped by a Canadian company does not report through it as a matter of course. The group report is made where the parent sits, and the United States members' figures appear in that report. What the United States entities need is the position on the record: which entity is reporting for the group, in which jurisdiction, and whether anything is asked of the members themselves. Groups get this wrong in both directions, and being wrong surfaces years later when the exchanged data do not match.
What is transfer pricing?
The meaning of transfer pricing is narrow and specific: it is how related companies in a group price what they sell each other — goods, services, financing, the use of intellectual property. Tax law requires those prices to be what independent parties would have agreed, the arm's length principle, so profit is not simply moved to a lower-taxed country. Canada tests it under s.247, the US under s.482, India under s.92, and each expects documentation prepared contemporaneously. See transfer pricing documentation.
What is OECD Pillar One?
The part of the international agreement that reallocates a share of taxing rights over the very largest and most profitable groups to the jurisdictions where their customers and users are, regardless of physical presence — plus a simplified approach to routine marketing and distribution returns. It is aimed at the digitalised economy problem that physical-presence rules could not reach, and its implementation is still moving, which is why we read the current instrument rather than the original blueprint. See BEPS and Pillar Two.
