India: Final Rules on Master File and Country-by-Country Report

​Published on November 16, 2017

Transfer Pricing is a hot topic in Indian taxation. Following global changes with the OECD Base Erosion and Profit Shifting (”BEPS”) project, Transfer Pricing in India is undergoing changes which also affect German invested enterprises in India. Though not being an OECD member, India follows the 2016 OECD BEPS proposals and has implemented its Master File and County-by-Country (”CbC”) reporting (”CbCR”) requirements already in February 2016. Now, end of October 2017, the missing Master File and CbCR guidelines have been introduced.

For applying the Master File guidelines which govern maintenance and furnishing of the Master File, low thresholds have been notified. Many foreign invested companies will be covered. Critical comments given by industry in response to the Draft Rules, have not been accepted by the Indian Government. Content wise, the new Indian Master File guidelines are more stringent than OECD model guidelines, inter alia requiring a detailed description of financial arrangements instead of a general description.
 
With regard to the CbC reporting the OECD threshold has been applied. With the Indian threshold being prescribed in INR the applicability of CbC regulations will have to be revisited every year based on the foreign exchange rate as prescribed in the Indian Income Tax Law. Content wise, the new Indian CbCR guidelines are in line with OECD model guidelines.

Indian Income Tax Rules prescribe the forms to be filed in order to comply with the Master File and CbCR regulations. For the first time, Indian taxpayers are now preparing to file their compliance forms on or before 31st March 2018 for the Indian Financial Year (”FY”) 2016-17 (12th April 2016 to 31st March 2017).

Please read the complete articel here »