India has extended its first country-by-country (CbC) reporting deadline to March 31, 2018.
India also released draft tax rules and forms for companies to use when preparing and filing a Master File. India's low thresholds for Master File reporting requirements could mean that some Canadian multinationals with a limited presence in India may still have an obligation to prepare and file a Master File in India, even though they do not currently have to prepare a Master File in Canada. The first Master File is also due March 31, 2018.
India's one-time extension to its CbC deadline will likely be welcomed by multinationals with a filing requirement in India, as they now have more time to complete their first CbC reports. The previous deadline for filing country-by-country reports in India was November 30, 2017 for the taxation year ended March 31, 2017.
India announced in its 2016 budget that it was adopting Local File, Master File and CbC reporting in-line with the recommendations contained in the OECD report on Action 13 of the BEPS Action Plan.
Under the CbC rules subsequently included in India's legislation, the due date for filing a CbC report in that country is the same as the due date for filing an income tax return for the relevant accounting year (November 30, 2017 for the first CbC report). India noted that it would release detailed rules for Local and Master File reporting at a later date.
CbC-filing deadline extension
India's draft CbyC legislation was released in early October 2017, but named a November 30, 2017 deadline for filing CbC reports for taxation years ending March 31, 2017. Subsequently, India issued a circular on October 25, 2017 extending the due date for the filing of the first CbC report to March 31, 2018. India is granting the one-time extension to alleviate potential hardships encountered by taxpayers in filing their CbC report.
Draft Master File rules
India released draft rules and forms for the Master File on October 6, 2017. The requirements to maintain and file a Master File in India apply if two conditions are met:
These low thresholds could cause Canadian multinationals with a limited presence in India to nonetheless be required to prepare and file a Master File in India, even though they do not have to maintain such a file in Canada.
India's Master File draft rules - How they differ from the OECD's recommendations
The prescribed information and documents that must form part of the Master File are generally in line with the recommendations in Action Plan 13. However, India's "functional analysis" requirement is more specific than that outlined by the OECD. India requires multinational entities to include a description of the functions, asset and risk analysis of all entities within the group that contribute 10% or more of the entity's revenues, assets or profits.
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