Central Board of Direct Taxes (CBDT) signs two Indian Advance Pricing Agreements (APAs) in November, 2017
Central Board of Direct Taxes (CBDT) signs two Indian Advance Pricing Agreements (APAs) in November, 2017
The Central Board of Direct Taxes (CBDT) has entered into 2 Bilateral Advance Pricing Agreements (APAs) during the month of November, 2017. These Agreements are the first ever Bilateral APAs with The Netherlands. With the signing of these Agreements, the total number of APAs entered into by the CBDT has gone up to 186. This includes 171 Unilateral APAs and 15 Bilateral APAs.
These two APAs pertain to the Electronics and Technology sectors of the economy. The international transactions covered in these agreements include Distribution, Provision of Marketing Support Services, Provision of Business Support Services, etc.
About Advance Pricing Agreements (APAs):
- An advance pricing agreement (APA) is an ahead-of-time agreement between a taxpayer and a tax authority on an appropriate transfer pricing methodology (TPM) for a set of transactions at issue over a fixed period of time.
Bilateral and multilateral APAs:
APAs are generally bi- or multilateral—i.e. they also include agreements between the taxpayer and one or more foreign tax administrations under the authority of the mutual agreement procedure (MAP) specified in income tax treaties. The taxpayer benefits from such agreements since they are assured that income associated with covered transactions is not subject to double taxation by the IRS and the relevant foreign tax authorities.
- The APA provisions were introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014.
The APA Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance. Since its inception, the APA Scheme has been well-accepted by taxpayers.
