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Exchange of country-by-country reports
Why is it in the news ?
- The Central Board of Direct Taxes (CBDT) said India and the US can now exchange country-by-country (CbC) reports filed by the ultimate parent corporations based in either of the countries.
- This exchange will reduce the compliance burden on parent corporation's subsidiaries operating out of these countries.
- The relevant bilateral agreement would be signed by March 31.
More in the news
- The Income-tax Act requires Indian subsidiaries of multinational companies to provide details of key financial statements from other jurisdictions where they operate.
- This provides the I-T Department with better operational view of such companies, primarily with regards to revenue and income tax paid.
- The provision was a part of the base erosion and profit shifting action plan, and later incorporated in I-T Act also.
- The new agreement would enable both the countries to exchange CbC reports filed by the ultimate parent entities of international groups in the respective jurisdictions.
- Base erosion and profit shifting:(1) Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.(2) Under the OECD/G20 Inclusive Framework on BEPS, over 125 countries and jurisdictions are collaborating to implement the BEPS measures and tackle BEPS.
Source
Indian Express.