Skip to Main Content

Clark Armitage Comments on Country-by-Country Reporting in Law360

May 24, 2019, Law360 Tax Authority

Large multinationals should use the global blueprints of their business operations, which involve detailed information they're required to submit under international tax rules, to assess their own potential weaknesses and spot any red flags before foreign auditors do.

. . .

Just as these reports are a risk assessment tool for tax administrations, they're a risk assessment tool for taxpayers, according to Clark Armitage, an international tax attorney at Caplin & Drysdale. He said the reports aren't as valuable for businesses, which presumably have documented their transfer pricing, but they can help highlight areas of weakness.

Different factors can cause a potentially questionable situation in a jurisdiction. Armitage said a multinational should look at a country where it has, for example, 30% of its employees but only 5% of its profits.

"Once you do take a look at that country, you're going to assess the strength of your transfer pricing there and be ready to defend," he said.

. . .

It's possible that information from country-by-country reports can be abused, but a tax administration's decisions would have to be sustained by that country's local system, according to Armitage at Caplin & Drysdale.

"If a particular country comes in and makes an adjustment that seems clearly to rely on something that's not what the local law permits, then presumably that taxpayer can defeat the adjustment in a local administrative process or in court," he said.

Armitage added that if a company is unsuccessful in challenging the adjustment, then "you have to wonder whether it's really an improper use" of the information from the report.

"I think every situation has to be looked at as a discrete matter," he said.

For the full article, please visit Law360’s website (subscription required).

Excerpt taken from the article “Multinationals Should Use Int'l Tax Reports To Look Inward” by Natalie Olivo for Law360 Tax Authority.


About Caplin & Drysdale
Celebrating our 55th Anniversary in 2019, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
New York, NY Office:
295 Madison Avenue
12th Floor
New York, NY 10017


This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
© 2022 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practice Area(s)