On 31 October 2017, the Central Board of Direct Taxes (CBDT) published the Final Rules for country by country (CbC) reporting and the furnishing of the master file. The Final Rule contain a few administrative changes and clarifications. However, the Final rules are in principle same as the draft rules issued on 6 October 2017.

The Final rule clarifies the following requirements:

Monetary threshold:

The threshold for the CbC report is total consolidated group revenue of at least Rs. 5,500 crore. The threshold for the master file is consolidated group revenue exceeding Rs. 500 crore and either the aggregate value of international transactions as per the books of accounts exceeding Rs. 50 crore or aggregate value of international transactions in respect of intangible property exceeding Rs. 10 crore.

Year of applicability for the threshold of INR 5 billion in case of Master File:

Changed from immediately preceding Financial Year (FY) to accounting year.

Timelines:

Small change on timelines with respect to CbCR reporting for multiple entities.

Forms:

Form numbers have been changed and have been sequentially aligned. For format of form, no major change except a new column of ‘Administrative, management and support services’ as one of the business activities forming part of the form for CbCR (Form 3CEAD), in line with the format prescribed by the Organization for Economic Cooperation and Development (OECD).

Master File:

As per the final rules, a list of all entities (along with addresses) in the international group, instead of all the operating entities (as mentioned in draft rules), needs to be maintained in the Master File. It is important to note that there is no change with respect to the requirement of filing information in Part A of Form 3CEAA by every entity, being a constituent entity of an international group, whether or not the threshold for maintenance of Master File is satisfied.

Conversion rate:

In order to determine the applicability of the Master File and CbCR threshold limits, the rules specify that where the total consolidated group revenue of the international group, as reflected in the consolidated financial statement, is in foreign currency, the telegraphic transfer buying rate of such currency on the last day of the accounting year preceding the accounting year shall be used as the rate of exchange for arriving at the value in INR.