India and the United States have signed an Inter-Governmental Agreement for Exchange of Country-by-Country (CbC) Reports by Shri P.C.Mody, Chairman, Central Board of Direct Taxes and Mr. Kenneth I. Juster, Ambassador of the United States of America to India on behalf of the two countries.
- India has already signed the Multilateral Competent Authority Agreement (MCAA) for Exchange of CbC Reports, which has enabled exchange of CbC Reports with 62 jurisdictions.
- This Agreement for Exchange of CbC Reports, along with the Bilateral Competent Authority Arrangement, will enable the countries to automatically exchange CbC Reports filed by the parent entities of Multinational Enterprises (MNEs) in the respective jurisdictions with effect from January 1, 2016.
- It would also obviate the need for Indian subsidiary companies of US MNEs to do local filing of the CbC Reports, thereby reducing the compliance burden.
- The objective is to ensure that all tax authorities have access to the same information about an MNC’s value chain and the resulting tax consequences.
About Country-by-Country (CbC) Report:
- Country-by-Country (CbC) reporting is part of a wide range of international measures aimed at combating tax avoidance through more comprehensive exchanges of information between countries.
- CbC reporting implements Action 13 of the OECD/G20 Base erosion and profit shifting (BEPS) action plan.
- It also contains a list of all the constituent entities of the multi-national company operating in a particular jurisdiction and the nature of the main business activity of each constituent entity. This information enables an enhanced level of assessment of tax risk by both tax administrations.