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India-USA agreement on Country-by-Country report exchange Notification

India-USA agreement on exchange of Country-by-Country reporting notified by CBDT

MINISTRY OF FINANCE
(Department of Revenue)

Notification No. 37/2019

New Delhi, the 25th April, 2019

(INCOME TAX)

S.O.1653(E).—Whereas an Inter-Governmental Agreement for Exchange of Country-by-Country Stories was entered into by the Government of the Republic of India and the Government of the USA of America, which was signed at New Delhi on 27th day of March, 2019 (hereinafter referred to as the stated Agreement and enclosed herewith as Annexure);

And whereas, the stated Agreement shall enter into pressure on the date on which the second of the 2 Events has offered a written notification to the Government of the other jurisdiction in accordance with paragraph (1) of Article 5 of the stated Agreement;

Now, subsequently, in train of the powers conferred by item (ii) of clause (b) of sub-section (9) of section 286 of the Revenue-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the stated Agreement, as set out within the Annexure hereto, and all the supply of the stated Agreement shall be given effect to in the Union of India in accordance with paragraph (1) of Article 5 of the stated Agreement.

[F.No. 500/15/2015-APA-I]

RASMI RANJAN DAS, Jt. Secy. (FT&TR-I)

ANNEXURE

Agreement between the government of the Republic of India and the federal government of the USA of America on the exchange of country-by-country studies

Whereas the Authorities of the Republic of India and the Authorities of america of America (every, a “Party,” and collectively, the “Parties”) want to conclude an agreement to extend international tax transparency and improve entry of their respective tax authorities to info relating to the worldwide allocation of revenue, taxes paid, and certain indicators of the situation of economic activity among tax jurisdictions by which multinational enterprise groups (“MNE Groups”) function by way of the automated exchange of annual country-by-country stories (“CbC Reports”), with a view to assessing high-level switch pricing risks and other base erosion and revenue shifting related risks, as well as for financial and statistical evaluation, the place applicable;

Whereas the CbC Report is one aspect of a standardized strategy to switch pricing documentation which is meant to offer tax administrations with relevant and dependable info to perform an efficient and strong switch pricing danger assessment evaluation;

Whereas the laws of the Republic of India and america of America require the reporting entity of an MNE Group to yearly file a CbC Report;

Whereas Article 28 (Exchange of Info and Administrative Assistance) of the Conference between the Government of the Republic of India and the Government of america of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Revenue, together with a associated protocol (the “Convention”), signed at New Delhi on 12th September 1989 authorizes the exchange of data for tax functions, including the automated exchange of data;

Now, subsequently, the Parties have agreed as follows:

ARTICLE 1
Definitions

1. For the needs of this Agreement and the Association described in paragraph 2 to Article 2 of this Agreement, the next phrases shall have the meanings set forth under:

a) the term “Group” means a set of enterprises associated by means of possession or control such that it is either required to organize consolidated financial statements for financial reporting purposes underneath applicable accounting rules or can be so required if fairness pursuits in any of the enterprises have been traded on a public securities exchange;

b) the time period “multinational enterprise group” or “MNE Group” means any Group that (i) consists of two or extra enterprises the tax residences of that are in several jurisdictions, or consists of an enterprise that’s resident for tax purposes in a single jurisdiction and is subject to tax with respect to the enterprise carried out by means of a everlasting establishment in another jurisdiction, and (ii) shouldn’t be an Excluded MNE Group;

c) the term “Excluded MNE Group” means a Group that isn’t required to file a CbC Report on the idea that the annual consolidated group revenue of the Group in the course of the fiscal yr instantly preceding the reporting fiscal yr, as reflected in its consolidated monetary statements for such previous fiscal yr, is under the edge that’s outlined in home regulation by the jurisdiction of tax residence of the Reporting Entity and is in line with the 2015 Report (for functions of the foregoing, the edge consists of any modifications which will end result from the 2020 evaluation contemplated in the 2015 Report);

d) the term “Constituent Entity” means:

(i) with respect to an MNE Group having a Reporting Entity resident for tax functions in america, any “Constituent Entity” as defined in the relevant U.S. Treasury laws; and

(ii) with respect to an MNE Group having a Reporting Entity resident for tax functions in India, any “constituent entity” as outlined within the relevant section of the Revenue-tax Act, 1961;

(e) the time period “Reporting Entity” means the Constituent Entity that, by virtue of home regulation in its jurisdiction of tax residence, information the CbC Report in its capacity to take action on behalf of the MNE Group;

(f) the time period “CbC Report” means the Country-by-Country Report back to be filed yearly by the Reporting Entity in accordance with the laws of its jurisdiction of tax residence and with the knowledge required to be reported beneath such legal guidelines overlaying the gadgets and reflecting the format set out in the 2015 Report (for functions of the foregoing, the knowledge and format consists of any modifications that outcome from the 2020 evaluate contemplated within the 2015 Report);

(g) the term “Fiscal Year” means:

(i) with respect to an MNE Group having a Reporting Entity resident for tax functions in america, the “Reporting Period” as defined in the relevant U.S. Treasury laws; and

(ii) with respect to an MNE Group having a Reporting Entity resident for tax functions in India, the “reporting accounting year” as defined in the related part of the Revenue-tax Act, 1961; and

(h) the time period “2015 Report” means the ultimate consolidated report, entitled Transfer Pricing Documentation and Country-by-Country Reporting, on Motion 13 of the OECD/ G20 Action Plan on Base Erosion and Revenue

2. The terms “United States”, “India”, “Competent Authority”, and “Contracting State” have the which means they
have in the Conference.

three. As regards the appliance of this Agreement at any time by a Celebration, any term not otherwise outlined on this Agreement shall, until the context in any other case requires or the Competent Authorities comply with a standard which means (as permitted by home regulation), have the which means that it has at the moment beneath the legal guidelines of the Celebration making use of this Agreement, any which means underneath the relevant tax legal guidelines of that Get together prevailing over a which means given to the term underneath other legal guidelines of that Social gathering.

ARTICLE 2
Exchange of Info with Respect to MNE Teams

1. Pursuant to the provisions of Article 28 of the Conference, the Competent Authority of each Social gathering shall exchange with the Competent Authority of the other Get together yearly, on an automated basis, the CbC Report acquired from every Reporting Entity that is resident for tax functions in its jurisdiction, offered that, on the idea of the knowledge offered within the CbC Report, a number of Constituent Entities of the MNE Group of the Reporting Entity are resident for tax purposes in the jurisdiction of the other Competent Authority, or are subject to tax with respect to the enterprise carried out via a everlasting institution situated in the jurisdiction of the other Competent Authority.

2. The Competent Authorities shall signal an association underneath the mutual agreement process offered for in Article 27 of the Convention (the “Arrangement”), which shall:

a) establish the process for the time and manner of the exchange of the CbC Reviews described in paragraph 1 of Article 2 of this Agreement;

b) set forth the process for collaboration on transmission and errors within the exchange of the CbC Stories described in paragraph 1 of Article 2 of this Agreement;

c) present for confidentiality, knowledge safeguards, and applicable use with respect to the CbC Studies described in paragraph 1 of Article 2 of this Agreement;

d) present for consultations with respect to the CbC Stories described in paragraph 1 of Article 2 of this Agreement; and

e) present for modifications to, and term of, the Arrangement.

The Arrangement shall be in line with this Agreement and the Convention.

ARTICLE 3
Confidentiality and Limitation of Use

All info exchanged shall be topic to the confidentiality and different protections offered for in the Convention, including the provisions limiting using the knowledge exchanged. In the occasion of termination of this Agreement, all info previously exchanged underneath this Agreement shall remain subject to such phrases of the Convention.

ARTICLE 4
Consultations and Amendments

1. In case any difficulties within the implementation of this Agreement arise, both Get together might request consultations to develop applicable measures to make sure the achievement of this Agreement.

2. This Agreement may be amended by written mutual agreement of the Parties. Until in any other case agreed upon, such an amendment shall enter into drive by way of the identical procedures as set forth in paragraph 1 of Article 5 of this

ARTICLE 5
Time period of the Agreement

1. This Agreement shall enter into drive on the date on which the second of the two Parties has offered a written notification to the Authorities of the other jurisdiction that the required inner procedures for entry into pressure of this Agreement have been completed. Nevertheless, exchange of data beneath this Agreement shall not begin till the Arrangement is operative by its terms.

2. This Agreement shall terminate on the sooner of (1) the date of termination of the Conference or (2) the first day of the month following the expiration of a interval of 12 months after the date upon which both Social gathering supplies discover of termination in writing to the other Celebration.

In witness whereof, the undersigned, being duly approved by their respective Governments, have signed this Agreement.

Carried out at New Delhi, in duplicate, this 27th day of March, 2019, within the English and Hindi languages, each texts being equally authentic. In case of divergence between the two texts, the English textual content shall prevail.

FOR THE GOVERNMENT OF THE
REPUBLIC OF INDIA:

FOR THE GOVERNMENT OF THE
UNITED STATES OF AMERICA:

P.C. Mody
Chairman, Central Board of
Direct Taxes

Kenneth I. Juster
Ambassador of the United
States to India