Country by Country Report

The Director General of Income Tax (Risk Assessment) has designated the Joint Director of Income Tax (Risk Assessment) as the Income Tax Authority as given by the Income Tax Act.

About CbC Report

The ‘Country by Country’ report or the CbC report is an annual return report that gives key elements of the financial statements by jurisdiction. All multinational enterprises are required to submit such a report under the BEPS Action Plan 13. The report gives the local tax authorities information like the income, revenues, capital, employment, tangible assets, etc.

Information in CbC Report

The CbC report from the multinational entities must contain the following:

• Information like revenue amount, profit/ loss after taxation of income, income tax amount that was paid, income tax accrued, accumulated earnings, capital, number of employees, tangible assets, etc. This is for each territory in which the MNE operates.
• Details about each constituent entity of the MNE: eg: territory where it is incorporated/ organised/ established/ resident.
• Details about the main business activities of each constituent entity.

BEPS

Base Erosion and Profit Shifting refers to the strategies used by MNEs to ‘shift’ profit to low tax jurisdictions (tax havens), resulting in ‘erosion of tax base’ in the high tax jurisdictions. The BEPS Action Plan 13 was developed by the OECD (Organisation for Economic Cooperation and Development) to make sure that MNEs report their profits correctly.