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India notifies pact with US for exchange of reports on tax evasion by MNCs

A CbC report aggregates country-by-country information relating to the global allocation of income, taxes paid, and certain other indicators of an MNC

Press Trust of India  |  New Delhi 

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India has notified the inter-governmental agreement with the US for exchange of country-by-country (CbC) reports on regarding and taxes paid in order to help check cross-border

The agreement, which was signed by Chairman P C Mody and US ambassador to India Kenneth Juster in March, was notified by the revenue department on April 25.

This agreement for exchange of CbC reports, along with the Bilateral Competent Authority Arrangement, will enable both the countries to automatically exchange filed by the ultimate parent entities of multinational enterprises (MNEs) in the respective jurisdictions, pertaining to the years commencing on or after January 1, 2016.

It will also obviate the need for Indian subsidiary companies of US multinationals to do local filing of the CbC reports, thereby reducing the compliance burden.

A CbC report aggregates country-by-country information relating to the global allocation of income, taxes paid, and certain other indicators of an MNC. It also contains a list of all the group companies operating in a particular jurisdiction and the nature of the main business activity of each such constituent entity.

MNEs having global consolidated revenue of 750 million euro or more (or a local currency equivalent) in a year are required to file in their parent entity's jurisdiction. The rupee equivalent of 750 million euros has been prescribed as Rs 5,500 crore in Indian rules.

This information will enable an enhanced level of assessment of tax risk by tax administrations of both the countries.

"The notification would enable both the countries to exchange filed by the ultimate parent entities of International Groups in USA, pertaining to the financial years commencing on or after January 1, 2016. As a result, the Indian entities would not be required to do local filing of the CbC Reports in India," Nangia Advisors (Andersen Global) Partner- Transfer Pricing Nitin Narang said.

First Published: Mon, April 29 2019. 14:50 IST
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