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India: Country-by-country reports, Indian subsidiaries of U.S. multinational entities

India: Country-by-country reports, Indian subsidiaries

The Central Board of Direct Taxes (CBDT) on 8 April 2019 issued a circular stating that Indian constituent entities of U.S. parent companies that have filed a country-by-country (CbC) report in the United States will also be required to file a CbC report in India by 30 April 2019.

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The agreement between India and the United States for the exchange of information in CbC reports was signed 27 March 2019—read TaxNewsFlash. However, because non-activation of the exchange mechanism and non-notification of the agreement, India’s internal procedures for the exchange of CbC information have yet to be completed; and thus, the CbC reports must be filed in India by 30 April 2019.

The April 2019 circular provides, in pertinent part:


The agreement for providing for exchange of the report of the nature referred to in subsection (2) of section 286 of the Act has been entered into by India and the USA on March 27, 2019. However, the agreement and the exchange mechanism would come into effect only after both the countries notify each other about the completion of all internal procedures for exchange which is underway.

Since filing of the report by the constituent entity referred under clause (a) or (aa) of subsection (4) of section 286 of the Act in India gets triggered on completion of twelve months from the last date of the reporting accounting year and Circular 9/2018 has extended the period for furnishing of the report till March 31, 2019 in respect of reporting accounting years ending up to February 28, 2018, due to non-notification of the agreement and resultantly non-activation of the exchange mechanism between India and the USA, said report has to be filed by such constituent entities, whose parent entities are resident in USA and whose reporting accounting years ended after February 28,2018.

In view of the above, in order to remove the genuine hardship faced by the constituent  entities referred to under clause (a) or (00) of said sub-section, whose parent entities are resident in USA, in furnishing of the report under sub-section (4) of section 286 of the Act read with sub-rule (4) of rule 10DB of the Rules, the Board, in exercise of powers conferred under section 119 of the Act, extends the period for furnishing of said report by such constituent entities, in respect of reporting accounting years ending up to April 29, 2018, to April 30, 2019.

KPMG observation

Affected taxpayers need to consider implications of the new circular and whether they need to file their CbC reports for calendar years 2016 and 2017 before 30 April 2019.

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