India, US to sign pact for exchange of country-by-country reports

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New Delhi | Published: March 16, 2019 5:17:41 AM

The CBDT said the agreement would enable both the countries to exchange CbC reports.

it act, income tax act, india , usThe Income Tax Act requires Indian subsidiaries of multinational companies to provide details of key financial statements from other jurisdictions where they operate.

India and the US can now exchange country-by-country (CbC) reports filed by the ultimate parent corporations based in either of the countries. This will reduce the compliance burden on their subsidiaries operating out of these countries, the Central Board of Direct Taxes (CBDT) said on Friday. The board said the relevant bilateral agreement would be signed by March 31.

The Income Tax Act requires Indian subsidiaries of multinational companies to provide details of key financial statements from other jurisdictions where they operate. This provides the IT department with better operational view of such companies, primarily with regards to revenue and income tax paid.

The provision was a part of the base erosion and profit shifting action plan, and later incorporated in IT Act also.

The CBDT said 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 January 1, 2016.

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Nitin Narang, partner – transfer pricing, Nangia Advisors (Andersen Global), said: “The absence of an agreement between India and the US till now entailed Indian entities to do a local filing of CbC reports in India by March 31, 2019. However, this development would enable both the countries to exchange CbC reports filed by the ultimate parent entities of international groups in the US, pertaining to the financial years commencing on or after January 1, 2016. As a result, Indian entities would not be required to do local filing of CbC reports in India.”

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