On 10 April 2018, the central board of direct taxes (CBDT) issued a draft which includes changes to the income tax rules and forms to align them more closely with the OECD’s base erosion and profit shifting (BEPS) Action 5. The draft essentially proposed an amendment to rule 44E, form 34C, 34D and 34DA (forms for advance rulings) as per Base Erosion and Profit Shifting (BEPS) Action 5 objectives, to improve transparency in relation to tax rulings.
The proposed modified forms seek details such as name, address and country of the residence of non-resident’s immediate parent company or ultimate parent company at application stage itself. Under BEPS Action 5, exchange of permanent establishment (PE) rulings (by Authority for Advance Rulings) are required to be done not only with the countries of residence of all related parties with whom taxpayer enters into transaction, but also with the country of residence of the immediate parent company and the ultimate parent company. The draft notification proposes these changes under rule 44E, which relates to application to the AAR.
