Country by Country Reporting

 

There is something called country by country reporting under transfer pricing regulations under Income-tax law. It needs to be filed with IT Department.

 

It consists of certain information relating to the global allocation of the MNE’s income and taxes paid together with certain indicators of economic activity like revenue, taxes paid, capital employed, head count etc. of each entity within the MNE group. Following is the format of such reporting as per OECD User Guide known as “Template for the Country-by-Country Report”.

 

CbCR Documentation to be complied by the international group having total consolidated group revenue > INR 5,500 crores* for accounting year ending on or before March 31, 2016 (for AY 2017-18) [similar ratio applicable to subsequent AY]

Category	Requirements	Due Date
Parent entity or alternate reporting entity, resident in India (Sec 286 (2))	File CbCR in Form No.3CEAD (for every reporting accounting year). The information included in the form are similar to those recommended in Action Plan 13.	For FY 2016-17: 31st March, 2018   For subsequent years: Due date of filling tax return
Constituent entity resident in India, of Parent Entity not resident in India (Sec 286(1))	File CbCR notification Form 3CEAC to the Director General of Income-tax (Risk Assessment)   Vide this form the CE intimates ·   Whether it is alternate reporting entity of the group; or ·   The details of parent entity or the alternate reporting entity and the country / territory of which said entity is a resident.	At least two months prior to the date of furnishing of CbCR in Form 3CEAD.
Constituent entity resident in India, of Parent Entity not resident in India – Specified cases, i.e, no agreement for exchange of CbCR or systematic failure (Sec 286(4))	File CbCR in Form 3CEAD (for every reporting accounting year)   In case there are more than one CEs resident in India, the international group may opt to designate a CE, wherein the Form 3CEAD has to be filed only by the designated CE. The intimation of the same needs to be filed by the designated CE in Form 3CEAE with Director General of Income-tax (Risk Assessment)	For filing of CbCR in Form 3CEAD: 1. For FY 2016-17: 31st March, 2018 For subsequent years: Due date of filling tax return   For filing of intimation of designated CE in Form 3CEAE- no due date has been prescribed.

 

Terms used in CbCR Reporting

1. Accounting Year

“accounting year” means-

(i)   a previous year, in a case where the parent entity or alternate reporting entity is resident in India; or

(ii) an annual accounting period, with respect to which the parent entity of the international group prepares its financial statements under any law for the time being in force or the applicable accounting standards of the country or territory of which such entity is resident, in any other case; 

 

2. Constituent Entity

“constituent entity” means-

(i)        any separate entity of an international group that is included in the consolidated financial statement of the said group for financial reporting purposes, or may be so included for the said purpose, if the equity share of any entity of the international group were to be listed on a stock exchange;

 

(ii)      any such entity that is excluded from the consolidated financial statement of the international group solely on the basis of size or materiality; or

 

(iii)    any permanent establishment of any separate business entity of the international group included in clause (i) or clause (ii), if such business unit prepares a separate financial statement for such permanent establishment for financial reporting, regulatory, tax reporting or internal management control purposes;

 

3. Alternate Reporting Entity

“alternate reporting entity” means any constituent entity of the international group that has been designated by such group, in the place of the parent entity, to furnish the report of the nature referred to in sub-section (2) in the country or territory in which the said constituent entity is resident on behalf of such group;

4. International Group

“international group” means any group that includes, -

(i)   two or more enterprises which are resident of different countries or territories; or

 

an enterprise, being a resident of one country or territory, which carries on any business through a permanent establishment in other countries or territories;