CBDT invites comments for improving transparency in tax rulings

In order to bring greater transparency in cross national transactions, the Central Board of Direct Taxes (CBDT) plans to formualate tax rulings that secure information about immediate parent or ultimate parent of subsidiaries of multi-national companies (MNCs).

In order to bring greater transparency in cross national transactions, the Central Board of Direct Taxes (CBDT) plans to formualate tax rulings that secure information about immediate parent or ultimate parent of subsidiaries of multi-national companies (MNCs), in applications filled by companies before the Authority of Advance Rulings (AAR).
 
"Under Base Erosion and Profit Shifting (BEPS) Action 5, exchange of rulings on Permanent Establishment (PE) by Authority for Advance Rulings is 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," Ministry of Finance said in a statement. 
 
Subsidiaries of multinationals fill form 34C for advance ruling, while Indian companies fill form 34D for the same in relation to the advance rulings on their transactions with MNCs or their subsidiaries in India.
 
"...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 etc. are captured at application stage itself," said the statement.
 
A draft notification has been framed and uploaded on the website of the Income Tax Department for comments from stakeholders and general public.
 
The comments and suggestions on the draft rules and forms may be mailed by April 30.
 
Source: Media reports
 

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