March 2019 BCAA for exchange of CbCRs between India and the US has been finalised, and will be signed before 31 March 2019
I. Background …
A filing requirement in respect of a Country-by-Country Report (CbCR) arises in India for an inbound
constituent entity (i.e., a constituent entity, resident in India, of an international group, the parent entity of which is not resident in India) if any of the circumstances mentioned in section 286(4) of the Income-tax Act, 1961 (Act) apply to that constituent entity (CE). Such circumstances include a situation where the parent entity of an international group is resident of a country, with which India does not have an agreement for exchange of CbCRs.
The due date1 for filing of CbCR in India by an inbound CE to which section 286(4) of the Act applies is 12 months from the end of the reporting accounting year (RAY). However, as a one-time measure, this due date was extended2 to 31 March 2019 for RAYs ending up to 28 February 2018.
II. CBDT’s press release regarding signing of the BCAA between India and the US …
Until today, it was understood that a Bilateral Competent Authority Agreement (BCAA) for exchange of CbCRs was under negotiation between India and the United States of America (the US). However, it was unclear whether the two countries would finalise and sign the BCAA by 31 March 2019.
Accordingly, it was anticipated that inbound CEs with parent entities resident in the US would be required to undertake filing of CbCR in India (in respect of RAYs ending up to 28 February 2018), if no such agreement would be signed by 31 March 2019.
However, in a press release issued today, the Central Board of Direct Taxes (CBDT) has confirmed that the BCAA for exchange of CbCRs between India and the US, has been finalised and will be signed before 31 March 2019.
It has also been stated that the exchange3 will be effective with respect to CbCRs pertaining to RAYs commencing on or after 1 January 2016.
III. Implications for inbound CEs …
In view of the press release, inbound CEs whose parent entities have filed CbCR in the US with respect to RAYs commencing on or after 1 January 2016, would not be required to undertake any CbCR filing in India. This would include any CbCR which has been filed on a voluntary basis in the US4.
However, if the US parent entity of an international group has not undertaken any voluntary filing of CbCR in the US4 – then, a CbCR filing in India would need to be undertaken by the inbound CE belonging to such international group.
IV. Conclusion …
A formal announcement from the CBDT regarding the signing of the BCAA between India and the US has been long awaited and has relieved many inbound CEs belonging to international groups with parent entities in the US, from a CbCR filing obligation in India. Indeed, providing access to CbCRs through an international exchange mechanism has been a preferable option for most international groups over a potential local filing, which has now been made possible with the affirmation that the BCAA between India and the US will be signed before 31 March 2019.
1 Notification No. 88/2018/ F. No. 370142/17/2018-TPL, dated 18 December 2018, which amends Rule 10DB(4) of the Income-tax Rules, 1962.
2 Circular No. 9/ 2018 dated 26 December 2018.
3 The exchange shall be with respect to CbCRs filed by parent entities of international groups in the respective jurisdictions (i.e., from the US to India and vice versa).
4 Voluntary filing in the US is applicable only for RAYs commencing between 1 January 2016 and 29 June 2016.
If your interest lies in a specific area or subject, do advise us so we can send you only the relevant alerts. For any additional information, please reach out to your PwC relationship manager or write in to
[email protected] With Best Regards
PwC TRS Team
About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with over 250,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
In India, PwC has offices in these cities: Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India's service offerings, visit www.pwc.com/in
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
©2019 PwC. All rights reserved
Follow us on Facebook, Linkedin, Twitter and YouTube.
© 2019 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity
Our Tax & Regulatory Services Direct Tax Indirect Tax Transfer Pricing Regulatory M & A Tax Controversy and Dispute Resolution Financial Services
NOTE : If you wish to unsubscribe receiving communications, please send in a blank email as reply to this mail with subject line "Unsubscribe".
