The Central Board of Direct Taxes (CBDT) has proposed changes in the application process for obtaining advance ruling to bring it in line with Base Erosion and Profit Shifting (BEPS) Action 5 objectives, which mandate spontaneous exchange of information on ruling with countries of immediate as well as ultimate parents of taxpayers.
The proposed modified forms seek details including names, address, the country of the residence and taxpayer identification number issued by the country of residence. The draft notification proposes these changes under rule 44E, which relates to application to the Authority of Advance Ruling (AAR).
A taxpayer typically moves the AAR to procure an opinion or authoritative decision by the authority regarding tax consequences of a transaction, proposed transaction or an assessment.
“Under BEPS Action 5, exchange of permanent establishment (PE) rulings (by Authority for Advance Rulings) are required to be done not only with the countries of residence of all related parties with whom taxpayer enters into transaction, but also with the country of residence of the immediate parent company and the ultimate parent company,” the board said.