India and the US can now exchange country-by-country (CbC) reports filed by the ultimate parent corporations based in either of the countries, which will reduce the compliance burden on their subsidiaries operating out of these countries, the Central Board of Direct Taxes (CBDT) said on Friday. The board said the relevant bilateral agreement would be signed by March 31.
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 CBDT said the agreement would enable both the countries to exchange CbC reports filed by the ultimate parent entities of international groups in the respective jurisdictions, pertaining to the financial years commencing on or after January 1, 2016. FE