|Indian revenue extends the time limit for furnishing CbCR by Indian constituent entity (subsidiary)
Earlier this month, India’s Central Board of Direct Taxation (CBDT) had vide notification dated 18 December 2018 prescribed timelines with respect to the furnishing of Country-by-Country Reporting (CbCR) in India by Indian subsidiaries/constituent entity in certain specified scenarios (Click here for Tax alert covering this notification). The relevant scenarios are
Scenario 1: Where the parent entity is not obligated to file CbCR;
Scenario 2: Where the parent entity being a resident of a country or territory with which India does not have an agreement providing for the exchange of CbCR;
The timelines prescribed for furnishing the CbCR under the said notification implied, that MNE group whose reporting accounting year, say, is 31 December 2017, the due date to file the CbCR in India would be 31 December 2018. At the same time, it also implied that the timelines for furnishing the CbCR say for reporting accounting year ending 31 December 2016, has already lapsed.
Extension of the time limit to furnish CbCR
Accordingly, in less than a week time of the said notification, in recognition of the hardship faced by the taxpayers in complying with the short deadline/implausible deadline, the CBDT has vide circular dated 26 December 2018 extended the due date to 31 March 2019 for situations covered in above-referred Scenario 1 & Scenario 2.
It is pertinent to note that, the CBDT has clarified in the said circular that the extended time limit of 31 March 2019 shall apply to all reporting accounting years ending up to 28 February 2018.
Impact of the said announcement
Indian CbCR compliances are effective from 1 April 2016 onwards. The latest circular from CBDT clarifies that the requirement to furnish CbCR in India applies to all reporting accounting year ending up to 28 February 2018. Accordingly, the instances getting covered in the scenario referred to above will have to furnish CbCR by 31 March 2019 for two years; example, for the year ended on 31 December 2016 and 31 December 2017 (if the reporting accounting year of the MNE group is 31 December year ending).
Also, presently there is no visibility of whether the impacted jurisdictions (such as the USA) would sign the relevant MCAA/agreement for automatic exchange of the CbCR before the extended timeline of 31 March 2019. The group may decide on the best course of action basis the above update.