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TMI BlogTRANSFER PRICING - Country By Country (“CbC") reporting - budget 2016X X X X Extracts X X X X X X X X Extracts X X X X ..... TRANSFER PRICING - Country By Country (“CbC") reporting - budget 2016 - By: - CS Swati Dodhi - Budget - Dated:- 1-3-2016 - - TRANSFER PRICING Introduction by country by country reporting requirements Revised standards for transfer pricing documentation and a template for country-by-country reporting of income, earnings, taxes paid and certain measure of economic activity was provided in The OECD report on Action 13 of Base Erosion and Profit Shifting ( BEPS ) Action plan. India has been one of the active members of BEPS initiative and part of international consensus. It is recommended in the BEPS report that the countries should adopt a standardised approach to transfer pricing documentation and Country By Country ( CbC ) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per India's interst in adoption of global standards of reporting as well as exchange of information and international consensus to adopt BEPS recommendations, the budget 2016 laid down points for CbC Reporting, as part of the existing transfer pricing documentation requirements. Amendments for introduction of CbC Reporting are proposed to be made in the Act and the Rules thereunder. The elements relating to CbC reporting requirement and matters related to it proposed to be included through amendment of the Act, by virtue of introduction of Section 286 of the Act , are as below - Entities to which CbC Reporting would apply The reporting provision shall apply in respect of an international group having consolidated rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue above a threshold to be prescribed, which has been presently proposed at Euros 750 million of consolidated group revenues [approx. ₹ 53.95 billion]; The parent entity for a group shall be an entity which is required to prepare consolidated financial statement under the applicable laws or would have been required to prepare such consolidated financial statements, had equity share of any entity of the group been listed on a recognized stock exchange in India; The parent entity of an international group, being resident in India, shall be required to furnish the report in respect of the group to the prescribed authority on or before the due date of furnishing of return of income for the Assessment Year relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial Year (previous year) for which the report is being furnished (which at present is November 30 for the tax year ended on March 31); In case of an international group whose parent entity is not situated in India, the constituent entity of the said international group, shall provide information regarding the country or territory of residence of the parent of the international group to which it belongs. Contents of the CbC Report The CbC report shall be in the format prescribed by OECD under BEPS Action Plan 13. It shall contain details of aggregate information in respect of revenue, profit loss before Income-tax, amount of Income-tax paid and accrued, details of capital, accumulated earnings, nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber of employees, tangible assets other than cash or cash equivalent in respect of each country or territory along with details of each constituent's residential status, nature and detail of main business activity and any other information as may be prescribed. The prescribed authority has been empowered to call for such document and information from the entity furnishing the report for the purpose of verifying the accuracy of the CbC report. A time period of 30 days has been laid down for fulfillment of such request. Filing of the CbC Report by specified entities An entity in India belonging to an international group shall be required to furnish CbC report to the prescribed authority, if the parent entity of the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup is resident: In a country with which India does not have an arrangement for exchange of the CbC report; Such country is not exchanging information with India even though there is an agreement; and This fact has been intimated to the entity by the prescribed authority. Sufficient safeguards have been provided to avoid duplication and multiplicity with respect of furnishing the CbC Reports with the prescribed authority. Penal provisions in case of failure to furnish the CbC report. Default For non-furnishing of the report by an entity which is obligated to furnish it - Default of upto one month ₹ 5,000 per day whereas Default is beyond one month ₹ 15000 per day for the period exceeding one m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onth Default for For non-furnishing of the report by an entity which has been served a penalty order, as per (1) above - Default for days beyond serving of penalty order Rs, 50,000 per day Default for For non-submission of requested information before prescribed authority - Till the days the default continues ₹ 5,000 per day and If default continues even after service of penalty order ₹ 50,000 per day Default of any inaccurate information in the CbC report - in case of - Knowingly furnishes inaccurate information, aware of any inaccuracy post furnishing the report and fails to inform the prescribed authority and furnish correct report within a period of fifteen days of such discovery; or if the entity furnishes inaccura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te information or document in response to notice of the prescribed authority - Panlty of ₹ 500,000 The entity can offer reasonable cause defence for non-levy of penalties mentioned above. The amendment will be effective from April 1, 2016 and shall apply for the previous year 2016-17 and subsequent assessment years. Therefore, CbC reporting for an international group having Indian parent, for the previous year 2016-17, shall apply only if the consolidated revenue of the international group in previous year 2015-16 exceeds ₹ 53.95 billion Proposal to amend sub-section (3A) of section 92CA where a reference for exchange of information is made by the competent authority, the time available to the TPO for completing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment, after excluding such time for which assessment proceedings were stayed or the time taken for receipt of such information, is less than sixty days, then such remaining period shall be extended to sixty days. ............. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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