1 March 2021

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Direct Taxation

India and USA set to sign Bilateral Agreement for Exchange of Country-by-Country (CbC) Reports


India and the USA would finalise signing of agreement for Exchange of Country-by-Country (CbC) Reports on or before 31st March, 2019.The agreement would enable both the countries to exchange CbC Reports filed by the ultimate parent entities of International Groups in the respective jurisdictions, pertaining to the financial years commencing on or after 1st January, 2016. Indian constituent entities of international groups headquartered in USA, who have already filed CbC Reports in the USA, would not be required to do local filing of the CbC Reports of their international groups in India.

In order to implement the recommendations of 2015 Final Report, titled “Transfer Pricing Documentation and Country-by-Country Reporting”, identified under the OECD Base Erosion and Profit Shifting (BEPS) Project, Section 286 of the Income-tax Act, 1961 was inserted vide Finance Act, 2016. Section 286(4) of the Income-tax Act, 1961 requires that, a constituent entity of an international group, resident in India, other than a parent entity or an alternate reporting entity of an international group, resident in India, shall furnish the Country-by-Country (CbC) Report in respect of the said international Group for a reporting accounting year within the period as may be prescribed.

The Organization for Economic Co-operation and Development (OECD) recommended country-by-country reporting requirements to address base erosion and profit shifting. The United States issued regulations to require country-by-country reporting by U.S. multinational enterprises (MNEs). The absence of an Agreement between India and USA till now entailed a possibility of local filing of CbC Reports in India. However, a Bilateral Competent Authority Arrangement, along with an underlying Inter-Governmental Agreement, for exchange of CbC Reports between India and the USA has now been finalized and will be signed on or before 31st March, 2019.

Tags : CBC reports Agreement Signing of

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