India:
Indian Revenue Prescribes Timelines For The Furnishing Of Country-By-Country Reporting (CbCR) In India By Indian Subsidiary/Constituent Entity In Notified Circumstances
04 January 2019
Nexdigm Private Limited
To print this article, all you need is to be registered or login on Mondaq.com.
In India, CbCR filings have been made applicable from Financial
Year 2016-17, modeled majorly on OECD's recommendations in
Action Plan 13 of the BEPS project. The Indian regulations require
that CbCR is to be furnished by the ultimate parent entity (UPE) or
Alternate Reporting Entity (ARE) of an 'international
group' in the country or territory of its residence. Therefore,
Constituent entity resident in India whose parent is situated
outside India is not required to furnish CbCR in India, except in
following scenarios -
- Scenario 1: Where
the parent entity is not obligated to file CbCR; or
- Scenario 2: Where
the parent entity being a resident of a country or territory with
which India does not have an agreement providing for the exchange
of CbCR; or
- Scenario 3: Where
there has been a systemic failure of the country or territory and
the same has been intimated by the prescribed authority to such
constituent entity.
While these situations existed, the law had not yet provided
clarity on the due date for filing such CbCR by the Indian Entity.
To address this, the Central Board of Direct Taxes (CBDT/apex tax
body in India) has vide notification dated 18 December 2018
prescribed timelines for furnishing CbCR by Constituent entity
resident in India as follows:
Scenario
|
Time-limit to furnish CbC Report
|
Scenario 1 and Scenario 2 referred to above
|
CbCR is required to be furnished within 12 months from the end
of the reporting accounting year. Example, if the accounting year
of UPE is ending on 31 December 2017, the Constituent entity
resident in India shall furnish CbCR on or before 31 December
2018.
|
Scenario 3
|
CbCR is required to be furnished six months from the end of the
month in which said systemic failure has been intimated by the
prescribed authority
|
- Scenario 1 could cover those
jurisdictions where CbCR filing has not been made mandatory during
the Year 2017 or before. Example, Switzerland and Hong Kong have
mandatory CbCR filing requirement for accounting year commencing
from 1 January 2018. Therefore, Constituent entity resident in
India whose parent is in Switzerland or Hong Kong may be required
to furnish CbCR in India for the reporting period say 1 January
2017 to 31 December 2017 and also 1 January 2016 to 31 December
2016.
- Similarly, Scenario 2 could cover
jurisdictions such as the USA, which has not yet signed MCAA for
the exchange of CbCR with India. Accordingly, Constituent entity
resident in India whose parent is in the USA is required to furnish
CbCR in India for the reporting period 1 January 2017 to 31
December 2017 on or before 31 December 2018.
- While the requirement to furnish the
CbCR in India in above scenarios was introduced by Finance bill
2016 itself, however, the timeline to furnish the CbCR was notified
as recent as yesterday (lag of nearly two years). This has lead to
a situation, wherein, the timelines for furnishing the CbCR say for
reporting year ending 31 December 2016, has already lapsed. The
CBDT is requested to provide necessary clarification (extension of
time limit for such instances) in order to address this anomaly at
the earliest.
|
|
|
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should be
sought about your specific circumstances.
POPULAR ARTICLES ON: Accounting and Audit from India
Audit Trails Under The Companies Act: A Hazy Path Ahead?
Shardul Amarchand Mangaldas & Co
The Ministry of Corporate Affairs, in its continuing drive to improve transparency and bolster integrity of financial reporting has amended the Companies (Accounts) Rules, 2014 requiring companies to ensure that the accounting software ...
Cost Audit: Legal Provisions And Issues
Metalegal Advocates
Cost accounting and audit seemed to be a not-so-relevant subject matter till lately when the Cost Audit Branch of the Ministry of Corporate Affairs has started issuing notices checking for compliance...
National Financial Reporting Authority (NFRA)
S&A Law Offices
On 1ST March 2018 Union Cabinet approved the establishment and functioning of National Financial Reporting Authority, followed by approval by capital market regulator Securities Exchange Board of India.