Country-by-Country Report (CbC)– Risk Assessment
As the due date for filing of CbC for applicable IndianHQ – FY 2021-22 (AY 2022-23) is approaching i.e., 31 March 2023, it is important to ensure accuracy of information flowing in CbC. However, an even more critical aspect is to understand how CbC will be consumed for risk assessment by tax authorities, which has tax implications across the jurisdictions it has presence. The article aims to broadly touch upon how a CbC can be read, from a risk assessment perspective, and other key points.
With various developments surrounding CbC such as public CbC, transitional CbC Safe Harbour for Pillar Two, it is even more key to analyze CbC of Group to identify any risk flags and streamline the operations from a transfer pricing perspective to pre-empt any tax litigation. Though CbC is a post-mortem exercise, it would aid in course correction for the future years.
How VSTN can support:
- Analyze CbC for MNE Groups (outbound and inbound where available) to understand any flags from risk assessment perspective, through:
- Jurisdiction specific insights from analysis of both jurisdictional information and Group information at large.
- Year-on-Year comparison to understand any perceived movement in functions, activities or revenue / profits accruing and follow-on documentation to mitigate any risk of attribution of restructuring.
- Industry specific comparison and insights based on publicly available CbC information.
- Assisting in streamlining the Group’s transfer pricing policy
- Transfer Pricing Readiness for transitional CbC Safe Harbour for Pillar Two