India-US sign Inter-Governmental Agreement for exchange of CbCR
Under Indian Transfer Pricing regulations constituent entities of multinationals groups must file a Country by Country Report('CbCR')in India if the MNE has consolidated revenue of more than INR 5500 crores (approximately USD 825 Million/ 750 Million Euros) in the previous year.
In a recent development, India and US have signed an Inter-Governmental Agreement on 27th March 2019 ('The Agreement') for exchange ofCbCRs. This shall enable authorities to automatically exchange CbCR filed in the jurisdiction of the Ultimate Parent Entity for the years commencing on or after January 1, 2016.
India CbCR regulations
Generally, an Indian constituent entity (of an MNE group headquartered overseas) is required to file only an intimation reporting details of the parent or alternate reporting entity in Form No 3CEAC. Thereafter, Indian authorities shall source CbCR through the exchange of information mechanism. However, a constituent entity must file CbCR in India where:-
The parent entity is not obligated to file the CbCR; or If India does not have an agreement for exchange of CbCR with a specific country; or There has been a systemic failure and such failure is intimated to the Indian constituent entity. Until The Agreement was signed, constituent entities of US multinational groups fell in second category.
Effect of The Agreement
The Agreement would now enable India and US to exchange CbCRs pertaining...