Brian Ernewein expresses hope that the IRS rather than CRA can serve a surrogate parent role for US multinationals in 2016

Although the U.S. issued a draft Regulation (REG-109822-15 - see IRS Bulletin: 2016-14) to implement country by country reporting, the likely effective dates will be such that there will be a substantial number of US multinationals in 2016 that will not yet be subject to such reporting requirements. This means that a large U.S. multinational with subsidiaries in, say, 50 different countries, would be subject to a requirement to provide the required OECD-mandated reporting to the local tax authorities for each of the 50 countries – unless the multinational can find a country which will treat its subsidiary in that country as a “surrogate parent” to accept the required filing on behalf of it, the US parent and the other 49 subsidiaries (with the tax administration for that country then being responsible for filing the report with the other countries).

It has been suggested that such U.S. multinationals might choose their Canadian subs as their surrogate parents. However, this would generate a huge workload for CRA for the one year. In this regard, Brian Ernewein stated:

One of the things that has been frequently raised is the possibility of the US itself serving as a surrogate country for the US multinationals for 2016 - if the IRS was prepared to accept those country by country returns, and if other countries are prepared to accept that that works in terms of cutting off the local filing obligation if the US uses itself as a surrogate. There is nothing settled on this but work is being done on this, and I am hopeful (given the desirability of a practical approach) that we will get somewhere on this.

Neal Armstrong. Brian Ernewein on BEPS under “Country-by-Country reporting” - 2016 Annual IFA Conference.