India and the US on Wednesday signed an agreement for exchange of country-by-country (CbC) report, a move that is expected to give a huge relief to subsidiaries of US headquartered companies in taxation-related matter.

The agreement was signed by PC Mody, Chairman, Central Board of Direct Taxes (CBDT), and Kenneth I Juster, US Ambassador to India. The agreement for exchange of CbC reports, along with the Bilateral Competent Authority Arrangement between the two competent authorities, will enable the two countries to automatically exchange the reports filed by the ultimate parent entities of the multinational enterprises in the respective jurisdictions pertaining to the years commencing on or after January 1, 2016. It will also obviate the need for Indian subsidiary companies of the American multinational enterprises to do local filing of the CbC Reports, thereby reducing the compliance burden.

Vijay Iyer, National Leader, Transfer Pricing, EY India, sees the move as further revalidating the willingness of Indian and US tax authorities to engage and amicably resolve issues for taxpayers.

SP Singh, Partner at Deloitte India, said one of the guiding principles underlying the various Action Points in respect of Base Erosion and Profit Shifting (BEPS) is transparency.

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