India Defers Surrogate Entity CbC Reporting Deadline
The Indian Central Board of Direct Taxes has issued a statement to defer the filing obligation on surrogate parent entities with regards to country-by-country reporting.
Section 286 was inserted into the Income Tax Act 1981 through the 2016 Finance Act to introduce a requirement to furnish a country-by-country report. The requirement to complete a CbC report, on groups’ international tax and transfer pricing affairs, was proposed by the OECD as part of its base erosion and profit shifting project.
Typically, the CbC report must be furnished by the ultimate parent entity of an international group in the country or territory of its residence (as provided for in subsection (2) of Section 286). The deadline for such reports is March 31, 2018, for the 2016-17 fiscal year (extended in October last year). This remains unchanged.
Subsection (4) of Section 286 provides for situations where a CbC report will instead be filed in India by a “surrogate parent entity,” where a group cannot file a CbC report in another territory that will subsequently exchange such multilaterally. Such an obligation arises where a parent entity is resident in a country or territory with which India does not have an agreement providing for exchange of CbC reports or where there has been a systemic failure of the country or territory.
The Indian Government had announced that, following appeals from companies regarding the March 31, 2018, deadline for surrogate parent entities, the deadline would be extended for these entities.
The Government has announced that the deadline for surrogate parent entities to file a CbC report will be deferred and prescribed after the enactment of the Finance Bill 2018. Finance Bill 2018, which has been endorsed by the lower house, includes a provision providing that the deadline for surrogate parent entities will be a date as prescribed. However, the Bill has yet to be enacted. It also includes a provision to amend the general CbC reporting deadline to twelve months after the end of a group’s fiscal year.