India: Guidance on confidentiality, use of CbC reports | KPMG Global
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India: Guidance on confidentiality, appropriate use of country-by-country reports

India: Guidance on confidentiality, use of CbC reports

India’s Central Board of Direct Taxes has issued guidance on the appropriate use of country-by-country (CbC) reports.


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The Organisation for Economic Co-operation and Development (OECD) and G20 countries in 2015 adopted an action plan to address base erosion and profit shifting (BEPS), and this plan includes three-tiered transfer pricing documentation standards—CbC reports, Master file, and Local file—under BEPS Action 13. Implementation of CbC reporting, thus, is one of the standards within the BEPS action plan required to be implemented by all jurisdictions that are members of OECD Inclusive Framework on BEPS, including India.

India adapted the requirements set out under BEPS Action 13 in Finance Act, 2016, and introduced the concept of the Master file and CbC report in the Indian transfer pricing regulations (effective from the fiscal year beginning 1 April 2016). To aid with the automatic exchange of the CbC reports with other tax jurisdiction, India also signed the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of CbC reports and currently has active bilateral relationships with some 50 countries. 

To meet the minimum standard of BEPS Action 13 implementation, the Central Board of Direct Taxes issued Instruction No. 2/2018 providing guidance on appropriate use of CbC reports. The instruction includes guidance about maintaining the confidentiality of CbC reports as well as a framework to monitor, control, and review the appropriate use of information received from CbC reports.

The guidance explicitly lists two situations when the use of CbC reports will be considered to be inappropriate: (1) if the information is used as a substitute for a detailed transfer pricing analysis of international transactions and determination of an arm's length price based on a detailed functional and comparability analysis; and (2) if the information is used as the only evidence to propose a transfer pricing adjustment.


Read a July 2018 report [PDF 852 KB] prepared by the KPMG member firm in India

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