2/26/2018 India signs multilateral pact for information exchange on MNCs - Business Line

India signs multilateral pact for information exchange on

MNCs
KR SRIVATS

     

39 countries have signed the pact so far to understand MNCs’ structures and taxes paid
NEW DELHI, MAY 13

India has signed a multilateral pact that would help it gain a better understanding on the way multinational enterprises structure
their operations around the world and allocate incomes and taxes paid.

The Multilateral Competent Authority Agreement for automatic exchange of country-by-country reports (CbC MCAA) was signed by
India at Beijing on May 12.

Besides India, ve other countries – Canada, China, Iceland, Israel and New Zealand – also signed the pact on the same day, taking
the total number of signatories to 39 countries.

The CbC MCAA allows all signatories to bilaterally and automatically exchange country-by-country reports with each other as
contemplated by Article 13 of BEPS (Base Erosion and Pro t Shifting) Action plan.

The OECD/G20 BEPS project had set out 15 key actions to reform the international tax framework and ensure that pro ts are
reported where economic activities are carried out and value created.

BEPS is of major signi cance for developing countries due to their heavy reliance on corporate income tax particularly from
multinational enterprises.

The Modi government had in this year's Budget introduced CbC reporting in the domestic law. The threshold for ling the report has
been maintained at €750 million and the format is to be noti ed at a later date.

The due date for ling the CbC report for tax year 2016-17 would be November 30, 2017.

CbC reporting requires multinational enterprises to provide aggregate information annually in each jurisdiction where they do
business, relating to the global allocation of income and taxes paid, together with the other indicators of the location of economic
activity within the MNE group.

Experts’ take
Amit Singhania, Partner, Shardul Amarchand Mangaldas & Co, a law rm, said that the Finance Bill 2016 had laid the foundation for
CbC reporting and India had now signed the multilateral pact, adding that these two developments are testament to India's resolve
to curb tax avoidance and promote transparency and exchange of information amongst nations.

Amit Maheshwari, Partner, Ashok Maheshwary & Associates, a CA rm, said Indian tax administrators can obtain complete
understanding of how MNCs structure their operations and allocate income and taxes. Also, the con dentiality of such information
is safeguarded as this is an entirely government-to-government channel for sharing information, he said. Similarly, other countries
also stand to bene t by signing the multilateral agreement, he added.

Published on May 13, 2016

TOPICS company information

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