The fiscal budget was announced in India on 29 February 2016. One of the most important developments from a Transfer Pricing (TP) regulations perspective was introduction of Country-by-Country (CbC) reporting norms for TP documentation. If this provision is enacted, it will be effective from Assessment Year 2017-18.
These norms are based on recommendations issued by the Organization of Economic and Commercial Development (OECD) and G20’s – Base Erosion and Profit Shifting (BEPS) action plan 13. OECD recommended three-tier TP documentation including:
CbC reporting requirement: India has proposed in the 2016 Union Budget to introduce the country-by-country reporting rules pursuant to the OECD’s three-tier transfer pricing documentation approach. Multinational groups where the ultimate parent company is a resident in India would be required to submit country-by country reports if the consolidated turnover exceeds €750 million (US$815 million).
Master file: The Union Budget 2016 proposes to implement the Master File and CbC reporting for international groups with consolidated revenues exceeding €750 million (US$815 million). Master file will contain information regarding description of the group’s capital structure, transfer pricing policy and significant intangible assets utilized.
Local File: The Union Budget 2016 proposes to introduce local file requirement as per the recommendations of the OECD’s base erosion and profit shifting (BEPS) Action 13. A local file will contain specific transfer pricing information for each relevant country of operation.
