CbCR Appropriate usage guidance released by CBDT

CBDT has released the much awaited guidance on usage of Country-by-Country Reports (CbCR) informationvide Instruction No. 2/2018. The guidance pertains to the appropriate use of CbCR information. With this, the uncertainty and apprehensions on appropriate use of detailed information/ data filed as part of CbCR,has been addressed by CBDT. Some of the key points, inter alia, of the Instruction are as follows:

  1. Emphasis and commitment by CBDT on appropriate use and confidentiality of information, both for inbound and outbound cases. Confidentiality given an utmost priority, strict adherence to guidelines contained in Exchange of Information Manual.
  1. CbCR information exchange to be facilitated through Multilateral Agreement or individual Bilateral agreements where needed.
  1. CbCR information to be accessed primarily by Competent Authority of India. Transfer Pricing Officers (TPOs) can also get access to CbCR information of relevant taxpayers during Transfer pricing TP assessment, for which standard operating procedures will be formulated.
  1. CbCR information to be used only for:
    • high level TP risk assessment, which can form a basis of further detailed examination during assessment
    • assessment of other BEPS related risks, which can form a basis of further enquiries
    • other economic and statistical analysis to evaluate the efficacy of CbCR reporting systems, benefits and risks.
  1. CbCR information usage will be considered inappropriate, if:
    • the information is used as a substitute of the regular fact finding and ALP determination during TP assessment
    • the information is used as the only basis for making a TP adjustment, without any other supporting analysis or evidence.
  1. Confidentiality given an utmost priority > sensitising the officers and adherence to detailed guidelines on maintaining confidentiality.
  1. Use of CbCR information during TP assessment will be closely monitored by jurisdictional CIT (TP) with quarterly report (highlighting inappropriate usage, if any) to be submitted to CBDT by Principal CCIT (through Competent Authority).
  1. Escalation mechanism and resolution mechanism in place. Taxpayer can raise concern on breach of appropriate use before CIT (TP) and Competent Authority, if required.
  1. Competent Authority is committed to delete any TP adjustment based on inappropriate use of CbCR information, during MAP proceedings.

To read more refer:https://dpncindia.com/blog/wp-content/uploads/2018/07/cbdt-instruction-2-2018.pdf

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