India-US Sign Pact for Exchange of CbC Reports

Indian subsidiaries of US multinational corporations (MNCs) will no longer have to locally file the country-by-country (CbC) reports of their international group in India.

In March 2019, India and the United States (US) signed an intergovernmental agreement for the exchange of CbC reports, that enables both the countries to automatically exchange CbC reports filed by the ultimate parent entities of MNCs based in their respective jurisdictions.

The relief applies to entities:

• that have filed that CbC report in the US for the financial year commencing on or after January 1, 2016; or
• have nominated a group entity in other tax jurisdiction (that has an information exchange agreement with India) as its alternate reporting entity to file the CbC report.

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A CbC report provides the income tax department with information relating to revenue, global income, tax paid and accrued, tangible assets, capital and other such details of a multinational group. It also provides a list of all the constituent entities of the MNC group operating in a particular jurisdiction and the nature of their main business activity.  

The report helps ensure that tax administrations get a complete understanding of how MNCs structure their operations in the country, and helps keep a check on cross border tax evasion.

In India, the threshold for CbC reporting is set at an annual consolidated group revenue of INR 55 billion (US$850 million) or more, generated in the preceding accounting year. This is in line with the €750 million threshold prescribed by the Organization for Economic Co-operation and Development (OECD) guidance on implementation of CbC.

India has multilateral competent authority agreements (MCAAs) for the exchange of CbC reports with 62 jurisdictions.

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