Transfer Pricing Documentation – Country by Country Reporting – An Overview

Synopsis
1. Introduction
2. Objectives of transfer pricing documentation requirements
3. A three-tiered approach to transfer pricing documentation
4. Country-by-Country Reporting Implementation Package
5. Recent Developments in India
6. Conclusion

1.       Introduction

1.1 International tax issues have never been as high on the political agenda as they are today. The integration of national economies and markets has increased substantially in recent years, putting a strain on the international tax rules, which were designed more than a century ago. Weaknesses in the current international taxation rules create opportunities for BEPS, requiring bold moves by policy makers to restore confidence in the system and ensure that profits are taxed where economic activities take place and value is created.

Following the release of the report Addressing Base Erosion and Profit Shifting in February 2013, OECD and G20 countries adopted a 15-point Action Plan to address BEPS in September 2013. The Action Plan identified 15 actions along three key pillars:

a) introducing coherence in the domestic rules that affect cross-border activities,

b) reinforcing substance requirements in the existing international standards, and

c) improving transparency as well as certainty.

1.2 So far, prior to the release of reports on Action 8-10 Aligning Transfer pricing Outcomes with Value Creation and Action 13 – TP Documentation and Country-by-Country, the OECD TP Guidelines for MNEs and Tax Administrations issued in July 2010, has been a major source of guidance on the TP issues to the MNEs and Tax Administrations.

1.3 Significant changes are proposed in OECD TP Guidelines, 2010, by Action 8-10 Aligning Transfer pricing Outcomes with Value Creation and Action 13 – TP Documentation and Country-by-Country Reporting, the summarised details of which are as follows:

It is expected that a new version of OECD TP Guidelines for MNEs and Tax Administrations would be issued by
OED before the end of the year 2016, incorporating the changes suggested in the
BEPS Reports on Action 8-10 Aligning Transfer pricing Outcomes with Value
Creation and Action 13 – TP Documentation and Country-by-Country Reporting.

1.4  
Implementation
therefore becomes key at this stage. The BEPS package is designed to be implemented
via changes in domestic law and practices, and via treaty provisions, with negotiations
for a multilateral instrument are under way and expected to be finalised in 2016.
OECD and G20 countries have also agreed to continue to work together to ensure a
consistent and co-ordinated implementation of the BEPS recommendations. Globalisation
requires that global solutions and a global dialogue be established which go beyond
OECD and G20 countries. To further this objective, in 2016 OECD and G20 countries
are preparing an inclusive framework for monitoring, with all interested countries
participating on an equal footing.

A better understanding
of how the BEPS recommendations are implemented in practice could reduce misunderstandings
and disputes between governments. Greater focus on implementation and tax administration
should therefore be mutually beneficial to governments and business. Proposed improvements
to data and analysis will help support ongoing evaluation of the quantitative impact
of BEPS, as well as evaluating the impact of the countermeasures developed under
the BEPS Project.

BEPS Action 13 report
contains revised standards for TP documentation and a template for Country-by-Country
[CbC] Reporting of income, taxes paid and certain measures of economic activity.

1.5 Action
13 of the Action Plan on Base Erosion and Profit Shifting requires the development of “rules
regarding TP documentation to enhance transparency for tax administration, taking
into consideration the compliance costs for business. The rules to be developed
will include a requirement that MNEs provide all relevant governments with needed
information on their global allocation of the income, economic activity and taxes
paid among countries according to a common template”. In
response to this requirement, a three-tiered standardised approach to TP
documentation has been developed.

First, the
guidance on TP documentation requires MNEs to provide tax administrations with high-level
information regarding their global business operations and TP policies in a “master file” that is to be available to
all relevant tax administrations.

Second, it
requires that detailed transactional TP documentation be provided in a “local file” specific to each country, identifying
material related party transactions, the amounts involved in those transactions,
and the company’s analysis of the transfer pricing determinations they have made
with regard to those transactions.

Third,
large MNEs are required to file a CbC Report
that will provide annually and for each tax jurisdiction in which they do business
the amount of revenue, profit before income tax and income tax paid and accrued.
It also requires MNEs to report their number of employees, stated capital, retained
earnings and tangible assets in each tax jurisdiction. Finally, it requires MNEs
to identify each entity within the group doing business in a particular tax jurisdiction
and to provide an indication of the business activities each entity engages in.

Taken together, these
three documents (master file, local file and CbC Report) will require taxpayers
to articulate consistent transfer pricing positions and will provide tax administrations
with useful information to assess TP risks, make determinations about where audit
resources can most effectively be deployed, and, in the event audits are called
for, provide information to commence and target audit enquiries.

1.6  This
information should make it easier for tax administrations to identify whether companies
have engaged in transfer pricing and other practices that have the effect of artificially
shifting substantial amounts of income into tax-advantaged environments. The countries
participating in the BEPS project agree that these new reporting provisions, and
the transparency they will encourage, will contribute to the objective of understanding,
controlling, and tackling BEPS behaviours.

The specific content
of the various documents reflects an effort to balance tax administration information
needs, concerns about inappropriate use of the information, and the compliance costs
and burdens imposed on business. Some countries would strike that balance in a different
way by requiring reporting in the CbC Report of additional transactional data (beyond
that available in the master file and local file for transactions of entities operating
in their jurisdictions) regarding related party interest payments, royalty payments
and especially related party service fees. Countries expressing this view are primarily
those from emerging markets (Argentina, Brazil, People’s Republic of China, Colombia,
India, Mexico, South Africa, and Turkey) who state they need such information to
perform risk assessment and who find it challenging to obtain information on the
global operations of an MNE group headquartered elsewhere. Other countries expressed
support for the way in which the balance has been struck in BEPS Action 13
report. Taking all these views into account, it is mandated that countries participating
in the BEPS project will carefully review the implementation of these new standards
and will reassess no later than the end of 2020 whether modifications to the content
of these reports should be made to require reporting of additional or different
data.

1.7  
Consistent and effective implementation of the TP documentation standards
and in particular of the CbC Report is essential. Therefore, countries participating
in the OECD/G20 BEPS Project agreed on the core elements of the implementation of
TP documentation and CbC Reporting. This agreement calls for the master file and
the local file to be delivered by MNEs directly to local tax administrations. CbC
Reports should be filed in the jurisdiction of tax residence of the ultimate parent
entity and shared between jurisdictions through automatic exchange of information,
pursuant to government-to-government mechanisms such as the multilateral Convention
on Mutual Administrative Assistance in Tax Matters, bilateral tax treaties or tax
information exchange agreements (TIEAs). In limited circumstances, secondary mechanisms,
including local filing can be used as a backup.

These new CbC Reporting
requirements are to be implemented for fiscal years beginning on or after 1 January
2016 and apply, subject to the 2020 review, to MNEs with annual consolidated group
revenue equal to or exceeding EUR 750 million. It is acknowledged that some jurisdictions
may need time to follow their particular domestic legislative process in order to
make necessary adjustments to their local law.

1.8 In
order to facilitate the implementation of the new reporting standards, an implementation
package has been developed consisting of model legislation which could be used by
countries to require MNE groups to file the CbC Report and competent authority agreements
that are to be used to facilitate implementation of the exchange of those reports
among tax administrations. As a next step, it is intended that an XML Schema and
a related User Guide will be developed with a view to accommodating the electronic
exchange of CbC Reports.

It is recognised that
the need for more effective dispute resolution may increase as a result of the enhanced
risk assessment capability following the adoption and implementation of a CbC Reporting
requirement. This need has been addressed when designing government-to-government
mechanisms to be used to facilitate the automatic exchange of CbC Reports.

Jurisdictions endeavour
to introduce, as necessary, domestic legislation in a timely manner. They are also
encouraged to expand the coverage of their international agreements for exchange
of information. Mechanisms will be developed to monitor jurisdictions’ compliance
with their commitments and to monitor the effectiveness of the filing and dissemination
mechanisms. The outcomes of this monitoring will be taken into consideration in
the 2020 review.

2.       Objectives
of transfer pricing documentation requirements

3.       A
three-tiered approach to transfer pricing documentation

3.1   This approach to TP
documentation will provide tax administrations with relevant and reliable information
to perform an efficient and robust TP risk assessment analysis. It will also provide
a platform on which the information necessary for an audit can be developed and
provide taxpayers with a means and an incentive to meaningfully consider and describe
their compliance with the arm’s length principle in material transactions.

    
(i)           
Master file

The master file should
provide an overview of the MNE group business, including the nature of its global
business operations, its overall TP policies, and its global allocation of income
and economic activity in order to assist tax administrations in evaluating the presence
of significant TP risk. In general, the master file is intended to provide a high-level
overview in order to place the MNE group’s TP practices in their global economic,
legal, financial and tax context. It is not intended to require exhaustive listings
of minutiae (e.g. a listing of every patent owned by members of the MNE group) as
this would be both unnecessarily burdensome and inconsistent with the objectives
of the master file. In producing the master file, including lists of important agreements,
intangibles and transactions, taxpayers should use prudent business judgment in
determining the appropriate level of detail for the information supplied, keeping
in mind the objective of the master file to provide tax administrations a high-level
overview of the MNE’s global operations and policies. When the requirements of the
master file can be fully satisfied by specific cross-references to other existing
documents, such cross references, together with copies of the relevant documents,
should be deemed to satisfy the relevant requirement. For purposes of producing
the master file, information is considered important if its omission would affect
the reliability of the TP outcomes.

The information required
in the master file provides a “blueprint” of the MNE group and contains relevant
information that can be grouped in five categories:

            a)   The
MNE group’s organisational structure;

            b)  A
description of the MNE’s business or businesses;

            c)  The
MNE’s intangibles;

            d)  The
MNE’s intercompany financial activities; and

            e)  The
MNE’s financial and tax positions.

Taxpayers should present
the information in the master file for the MNE as a whole. However, organisation
of the information presented by line of business is permitted where well justified
by the facts, e.g. where the structure of the MNE group is such that some significant
business lines operate largely independently or are recently acquired. Where line
of business presentation is used, care should be taken to assure that centralised
group functions and transactions between business lines are properly described in
the master file. Even where line of business presentation is selected, the entire
master file consisting of all business lines should be available to each country
in order to assure that an appropriate overview of the MNE group’s global business
is provided.

  
(ii)           
Local file

In contrast to the master
file, which provides a high-level overview, the local file provides more detailed
information relating to specific intercompany transactions. The information required
in the local file supplements the master file and helps to meet the objective of
assuring that the taxpayer has complied with the arm’s length principle in its material
TP positions affecting a specific jurisdiction. The local file focuses on information
relevant to the TP analysis related to transactions taking place between a local
country affiliate and associated enterprises in different countries and which are
material in the context of the local country’s tax system. Such information would
include relevant financial information regarding those specific transactions, a
comparability analysis, and the selection and application of the most appropriate
TP method. Where a requirement of the local file can be fully satisfied by a specific
cross-reference to information contained in the master file, such a cross-reference
should suffice.

 (iii)           
Country-by-Country Report

The CbC Report requires
aggregate tax jurisdiction-wide information relating to the global allocation of
the income, the taxes paid, and certain indicators of the location of economic activity
among tax jurisdictions in which the MNE group operates. The report also requires
a listing of all the Constituent Entities for which financial information is reported,
including the tax jurisdiction of incorporation, where different from the tax jurisdiction
of residence, as well as the nature of the main business activities carried out
by that Constituent Entity.

3.2  
The
CbC Report will be helpful for high-level TP risk assessment purposes. It may also
be used by tax administrations in evaluating other BEPS related risks and where
appropriate for economic and statistical analysis. However, the information in the
CbC Report should not be used as a substitute for a detailed TP analysis of individual
transactions and prices based on a full functional analysis and a full comparability
analysis. The information in the Country-by- Country Report on its own does not
constitute conclusive evidence that transfer prices are or are not appropriate.
It should not be used by tax administrations
to propose TP adjustments based on a global formulary apportionment of income.

4.       Country-by-Country
Reporting Implementation Package

4.1   Countries participating in the
OECD/G20 BEPS Project have therefore developed an implementation package for
government-to-government exchange of CbC Reports.

More specifically:

Model legislation requiring the ultimate parent entity of an MNE group to file the CbC Report in its jurisdiction of residence has been developed. Jurisdictions will be able to adapt this model legislation to their own legal systems, where changes to current legislation are required. Key elements of secondary mechanisms have also been developed.

Implementing arrangements for the automatic exchange of the CbC Reports under international agreements have been developed, incorporating the suggested conditions. Such implementing arrangements include competent authority agreements (“CAAs”) based on existing international agreements (the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, bilateral tax treaties and TIEAs) and inspired by the existing models developed by the OECD working with G20 countries for the automatic exchange of financial account information.

4.2  
Participating
jurisdictions endeavour to introduce as necessary domestic legislation in a
timely manner. They are also encouraged to expand the coverage of their
international agreements for exchange of information. The implementation of the
package will be monitored on an ongoing basis. The outcomes of this monitoring
will be taken into consideration in the 2020 review.

5.       Recent Developments in India –
Amendments by the Finance Act, 2016

5.1   The Finance
Act, 2016 has inserted section 286 relating to furnishing of report in respect
of international group by every parent entity or the alternate reporting entity
resident in India, on or before the due date specified u/s 139(1) of the
income-tax act, 1961, in the Form and manner, yet to be prescribed. This
section is effective from 1-4-17 i.e. assessment year 2017-18 and subsequent
years.

Further, new section 271GB has
been inserted wef 1-4-17 i.e. assessment year 2017-18 and subsequent years
relating to penalty for failure to furnish report or for furnishing inaccurate
report u/s 286.

In addition, section 271AA of the
Act relating to penalty for failure to keep and maintain information and document
etc. has been amended to provide that if any
person being constituent entity of an international group referred to in
section 286 fails to furnish the information and document in accordance with
provisions of section 92D, then, the prescribed authority may direct that such
person shall be liable to pay a penalty of Rs. 5,00,000/-.

5.2   Background as
explained in Explanatory memorandum explaining provisions of the Finance Bill,
2016, is as follows:

“BEPS action plan –
Country-By-Country Report and Master file

Sections
92 to 92F of the Act contain provisions relating to transfer pricing regime.
Under provision of section 92D, there is requirement for maintenance of
prescribed information and document relating to the international transaction
and specified domestic transaction.

The OECD report on Action 13 of
BEPS Action plan provides for revised standards for transfer pricing
documentation and
a template for country-by-country reporting of income, earnings, taxes paid and
certain measure of economic activity. India
has been one of the active members of BEPS initiative and part of international
consensus. It is recommended in the BEPS report that the countries should
adopt a standardised approach to transfer pricing documentation. A three-tiered
structure has been mandated consisting of:-

(i)     a master file containing
standardised information relevant for all multinational enterprises (MNE) group
members;

(ii)    a local file referring
specifically to material transactions of the local taxpayer; and

(iii)   a country-by-country report
containing certain information relating to the global allocation of the MNE’s
income and taxes paid together with certain indicators of the location of
economic activity within the MNE group.

The
report mentions that taken together, these three documents (country-by-country
report, master file and local file) will require taxpayers to articulate
consistent transfer pricing positions and will provide tax administrations with
useful information to assess transfer pricing risks. It will facilitate tax administrations
to make determinations about where their resources can most effectively be
deployed, and, in the event audits are called for, provide information to
commence and target audit enquiries.

The
country-by-country report requires multinational enterprises (MNEs) to report
annually and for each tax jurisdiction in which they do business; the amount of
revenue, profit before income tax and income tax paid and accrued. It also
requires MNEs to report their total employment, capital, accumulated earnings
and tangible assets in each tax jurisdiction. Finally, it requires MNEs to
identify each entity within the group doing business in a particular tax
jurisdiction and to provide an indication of the business activities each
entity engages in. The Country-by-Country (CbC) report has to be submitted by
parent entity of an international group to the prescribed authority in its
country of residence. This report is to be based on consolidated financial
statement of the group.

The
master file is intended to provide an overview of the MNE groups business,
including the nature of its global business operations, its overall transfer
pricing policies, and its global allocation of income and economic activity in
order to assist tax administrations in evaluating the presence of significant
transfer pricing risk. In general, the master file is intended to provide a
high-level overview in order to place the MNE group’s transfer pricing
practices in their global economic, legal, financial and tax context. The
master file shall contain information which may not be restricted to
transaction undertaken by a particular entity situated in particular country.
In that aspect, information in master file would be more comprehensive than the
existing regular transfer pricing documentation. The master file shall be
furnished by each entity to the tax authority of the country in which it
operates.

In order to implement the
international consensus, it is proposed to provide a specific reporting regime
in respect of CbC reporting and also the master file. It is proposed to include
essential elements in the Act while remaining aspects can be detailed in rules.
The elements relating to CbC
reporting requirement and matters related to it proposed to be included through
amendment of the Act are:

          (i) the
reporting provision shall apply in respect of an international group havingconsolidated revenue above a threshold to be prescribed.

            (ii) the
parent entity of an international group, if it is resident in India shall berequired to furnish the report in respect of the group to the prescribed
authority on or before the due date of furnishing of return of income for the
Assessment Year relevant to the Financial Year (previous year) for which the
report is being furnished;

               (iii)  the
parent entity shall be an entity which is required to prepare consolidated
financial statement under the applicable laws or would have been required to
prepare such a statement, had equity share of any entity of the group been
listed on a recognized stock exchange in India;

              
(iv) 
every
constituent entity in India, of an international group having parent entity
that is not resident in India, shall provide information regarding the country
or territory of residence of the parent of the international group to which it
belongs. This information shall be furnished to the prescribed authority on or
before the prescribed date;

               
(v) the
report shall be furnished in prescribed manner and in the prescribed form and
would contain aggregate information in respect of revenue, profit & loss
before Income-tax, amount of Income-tax paid and accrued, details of capital,
accumulated earnings, number of employees, tangible assets other than cash or
cash equivalent in respect of each country or territory along with details of
each constituent’s residential status, nature and detail of main business
activity and any other information as may be prescribed. This shall be based on the template provided in the OECD BEPS report on
Action Plan 13;

             
(vi)  an
entity in India belonging to an international group shall be required to furnish
CbC report to the prescribed authority if the parent entity of the group is
resident;-

(a)   in a country with which India does
not have an arrangement for exchange of the CbC report; or

(b)   such country is not exchanging
information with India even though there is an agreement; and

(c)    this fact has been intimated to
the entity by the prescribed authority;

            
(vii)  If
there are more than one entities of the same group in India, then the group can
nominate (under intimation in writing to the prescribed authority) the entity
that shall furnish the report on behalf of the group. This entity would then
furnish the report;

          
(viii) If
an international group, having parent entity which is not resident in India,
had designated an alternate entity for filing its report with the tax jurisdiction
in which the alternate entity is resident, then the entities of such group
operating in India would not be obliged to furnish report if the report can be
obtained under the agreement of exchange of such reports by Indian tax
authorities;

             
(ix) 
The
prescribed authority may call for such document and information from the entity
furnishing the report for the purpose of verifying the accuracy as it may
specify in notice. The entity shall be required to make submission within
thirty days of receipt of notice or further period if extended by the
prescribed authority, but extension shall not be beyond 30 days;

               
(x)  For non-furnishing of the report
by an entity which is obligated to furnish it, a graded penalty structure would
apply:-

(a)   if default is not more than a
month, penalty of Rs. 5000/- per day
applies;

(b)   if default is beyond one month, penalty of Rs. 15000/- per day for the
period exceeding one month applies;

(c)    for any default that continues
even after service of order levying penalty either under (a) or under (b), then
the penalty for any continuing default beyond
the date of service of order shall be @ Rs.
50,000/- per day;

             
(xi)
In case of timely non-submission
of information before prescribed authority when called for, a penalty of Rs.
5,000/- per day applies. Similar to the above, if default continues even
after service of penalty order, then penalty of Rs. 50,000/- per day applies for default beyond date of service of
penalty order;

             
(xii)
If
the entity has provided any inaccurate information in the report and,-

(a)   the entity knows of the inaccuracy
at the time of furnishing the report but does not inform the prescribed
authority; or

(b)   the entity discovers the
inaccuracy after the report is furnished and fails to inform the prescribed
authority and furnish correct report within a period of fifteen days of such
discovery; or

(c)    the entity furnishes inaccurate information or document in response to notice
of the prescribed authority, then penalty
of Rs. 500,000/- applies;

         (xiii)The
entity can offer reasonable cause defence for non-levy of penalties mentioned
above.

The proposed amendment in the Act
in respect of maintenance of master file and furnishing it are: –

(i)   
the
entities being constituent of an international group shall, in addition to the
information related to the international transactions, also maintain such
information and document as is prescribed in the rules. The rules shall
thereafter prescribe the information and document as mandated for master file
under OECD BEPS Action 13 report;

(ii)  
the
information and document shall also be furnished to the prescribed authority
within such period as may be prescribed and the manner of furnishing may also
be provided for in the rules;

(iii)  for non-furnishing of the
information and document to the prescribed authority, a penalty of Rs. 5 lakh
shall be leviable. However, reasonable cause defence against levy of penalty
shall be available to the entity.

As indicated above, the CbC
reporting requirement for a reporting year does not apply unless the
consolidated revenues of the preceding year of the group, based on consolidated
financial statement, exceeds a threshold to be prescribed. The current international
consensus is for a threshold of € 750 million equivalent in local currency.
This threshold in Indian currency would be equivalent to Rs. 5395 crores (at
current rates). Therefore, CbC reporting for an international group having
Indian parent, for the previous year 2016-17, shall apply only if the
consolidated revenue of the international group in previous year 2015-16
exceeds Rs. 5395 crore (the equivalent would be determinable based on exchange
rate as on the last day of previous year 2015-16). …..”

5.3   Section
286 of the Act relating to furnishing of report in respect of international
group provides for furnishing of a report in respect of an international group,
if the parent entity of the group is resident in India.

Sub-section (1)
provides that constituent entity in India of an international group, not
having a parent entity resident in India shall notify the prescribed authority
regarding the parent entity of the group to which it belongs or an alternate
reporting entity which shall furnish the report on behalf of the group in the
prescribed manner.

Sub-section (2)
provides that the parent entity of an international group, which is
resident in India, shall furnish a report in respect of the international group
on or before due date specified under sub-section (1) of section 139 for
furnishing of return of income of the relevant accounting year.

Sub-section (3)
provides for the details to be contained in the report to be furnished. It,
inter alia, provides that the report shall contain aggregate information
in respect of amount of revenues, profit and loss, taxes accrued and paid,
number of employees, details of constituent entities and the country or
territory in which such entities are resident or located.

Sub-section (4) provides
for furnishing report by entities resident in India and belonging to an
international group not headed by Indian resident entity.

Sub-section (5) provides
for circumstances under which the constituent entities referred to in
sub-section (4) shall not be required to furnish the report.

Sub-section (6) provides that the prescribed
authority may, by issuance of notice for the purpose of verifying the accuracy
of the report furnished by any entity, require submission of information and
document as specified in the notice.

Sub-section (7) provides
that the reporting requirement under this section shall not apply to an
accounting year, if the total consolidated group revenue for the accounting
year preceding it, does not exceed the prescribed threshold.

Sub-section (8) provides
for application of the section in accordance with such guidelines and subject
to such conditions as may be prescribed.

Sub-section (9) of the
proposed new section, inter alia, defines various terms for the purposes
of the new section.

5.4  
The new section at 5 places makes
reference to ‘as may be prescribed’ in respect of form, manner and date of
notification, form and manner of report to be submitted, other information to
be included in the report, threshold limit of total consolidated group revenue
for application of section and other guidelines and conditions for application
of section. However, so far no rules have been prescribed in respect of section
286.

5.5   However, as
mentioned in the Explanatory Memorandum, CbC reporting for an international group having Indian parent, for the
previous year 2016-17, shall apply only if the consolidated revenue of the
international group in previous year 2015-16 exceeds Rs. 5,395 crore (the
equivalent would be determinable based on exchange rate as on the last day of
previous year 2015-16).

6.       Conclusion

6.1  
So
far 44 countries have signed the Multilateral Competent Authority Agreement (MCAA) on CbC
reporting including India.

In addition, on
16 August 2016 OECD has issued further Guidance on the Implementation of
Country-by-Country reporting. This guidance covers the following issues:

               (i)  Transitional
filing options for MNEs (“parent surrogate filing”).

             
(ii) The
application of CbC reporting to investment funds.

              (iii)The
application of CbC reporting to partnerships.

             
(iv) The
impact of currency fluctuations on the agreed EUR 750 million filing threshold.

6.2  
Countries have agreed that implementing CbC
reporting is a key priority in addressing BEPS risks, and the Action 13 Report
recommended that reporting take place with respect to fiscal periods commencing
from 1 January 2016. Swift progress is being made in order to meet this
timeline, including the introduction of domestic legal frameworks and the entry
into competent authority agreements for the international exchange of CbC reports.
MNE Groups are likewise making preparations for CbC reporting, and dialogue
between governments and business is a critical aspect of ensuring that CbC
reporting is implemented consistently across the globe. Consistent
implementation will not only ensure a level playing field, but also provide
certainty for taxpayers and improve the ability of tax administrations to use
CbC reports in their risk assessment work.

[We have extensively relied upon final
report on ‘Action 13 – Transfer Pricing Documentation and
Country-by-Country Reporting’ and ‘Guidance on the Implementation of Country-by-Country
Reporting’ issued by OECD in August, 2016, and the Memorandum
Explaining the Finance Bill, 2016, in preparing the above article giving an
overview of the subject.]

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