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India Consults On Advance Pricing Agreement Regime Changes

Friday, April 13, 2018

India's Central Board of Direct Taxes has launched a consultation on changes to the country's tax ruling process and forms to enable the country to exchange information on tax rulings with other countries' tax authorities, as proposed by the OECD in its base erosion and profit shifting (BEPS) project.

The CBDT is proposing to amend forms 34C and 34D, submitted as part of a request for an advance pricing agreement (APA), to ensure that authorities collect information on a non-resident taxpayer's parent company, which is necessary for the exchange of information on tax rulings with the relevant foreign tax authorities. It will also amend the section in Form 34D on the "Particular(s) of the non-resident with whom the transaction is undertaken or proposed to be undertaken."

The CBDT said: "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. Therefore, in order to implement the recommendations made under Action 5 of BEPS Action Plan to bring greater transparency in cross national transactions, Form 34C and 34D (Forms for advance rulings) are required to be modified so that details such as name, address, and country of the residence of non-resident's immediate parent company or ultimate parent company are captured at application stage itself."