Clarifications to the Instructions for Schedule A (Form 8975)

Fiscally transparent entities. As noted in the Instructions for Form 8975, when submitting Form 8975 and Schedules A (Form 8975), filers must attach at least two Schedules A to the Form 8975. Generally, at least one Schedule A must be for the United States, and the code “US” should be entered on the tax jurisdiction line of Part I, Schedule A.

However, certain U.S. MNE groups may have only U.S.-organized constituent entities that are fiscally transparent. These fiscally transparent U.S. business entities do not have a tax jurisdiction of residence for purposes of reporting information on Form 8975. Thus, these fiscally transparent U.S. business entities, along with all other constituent entities of the U.S. MNE group that do not have a tax jurisdiction of residence, should be reported on one Schedule A that indicates the tax jurisdiction “stateless” by entering code “X5” on the tax jurisdiction line of Part I, Schedule A. The U.S. MNE’s fiscally transparent U.S. business entities should be listed in Part II of this Schedule A. Each U.S.-organized constituent entity is therefore listed on either a United States Schedule A or on a “stateless” Schedule A.

If a filing does not have either a United States Schedule A or a “stateless” Schedule A that contains fiscally transparent U.S. business entities, then the Form 8975 has not been completed properly. Filers who do not submit either a "stateless" Schedule A that contains fiscally transparent U.S. business entities or a United States Schedule A will receive a letter notifying them that an amended return must be filed to ensure that their complete and accurate information is exchanged.

Country codes. U.S. MNEs must submit a Schedule A (Form 8975) for each tax jurisdiction in which one or more constituent entities is tax resident. The tax jurisdiction field in Part I of Schedule A is a mandatory field, and U.S. MNEs are required to enter a two-letter code for the tax jurisdiction to which the Schedule A pertains. The country code for the United States is “US” and the country code for “stateless” is “X5.” All other country codes can be found at www.IRS.gov/CountryCodes.

Form 8975 and Schedule A information is exchanged using the OECD Country Code List that is based on the ISO 3166-1 Standard. Although the country codes found in the IRS link above contain the jurisdictions listed in the table below, those jurisdictions do not correspond to a valid OECD country code for purposes of exchanging the information. Therefore, do not enter any of these country codes on the tax jurisdiction line of Part I of Schedule A.

 

Tax Jurisdiction                           Country Code

Akrotiri                                                     AX

Ashmore and Cartier Islands          AT

Clipperton Island                                 IP

Coral Sea Islands                                 CR

Dhekelia                                                  DX

Paracel Islands                                     PF

Spratly Islands                                      PG

Other Country                                       OC

 

If the tax jurisdiction specified in the above list is associated with a larger sovereignty, use the country code for the larger sovereignty with which the tax jurisdiction is associated (e.g., Akrotiri and Dhekelia are considered a British Overseas Territory so the country code for the United Kingdom would be used (“UK”)). You should also include in Part III of Schedule A the name of the specific constituent entity and the jurisdiction where the constituent entity is located. Otherwise, use a separate Schedule A for “stateless” using the tax jurisdiction code “X5”and indicate the jurisdiction in Part III of that Schedule A.