A Milestone of 200 Advanced Pricing Agreements achieved by CBDT
3 weeks ago Shruti Goel 0
During the month of February 2018, the Central Board of Direct Taxes (CBDT) entered into seven more Advance Pricing Agreements (APA). All seven of these are Unilateral APAs. With the signing of these APAs CBDT has achieved a significant milestone of having signed 200 APAs. The overall number of APAs entered into by the CBDT till date has gone up to 203. Out of these 203 APAs, 185 are Unilateral APAs and 18 are Bilateral APAs. The CBDT has entered into 51 APAs so far (44 Unilateral APAs and 7 Bilateral APAs) in the current financial year.
Advanced Pricing Agreements (APAs)
The basic concept of Advanced Pricing Agreement (APA) was introduced in India under the Finance Act 2012. In India, the first lot was of 5 Agreements signed with the multinational companies on March 31, 2014. The international transactions are complex involving more than one countries. The main objective of APA is to bring tax certainty in such complex international transactions and also to overcome the issues occurring due to transfer pricing among the related parties. Under the scheme of APA, the prices of international transactions are already set in advance.
The seven APAs signed in February belong to different sectors of the economy, which are Pharmaceuticals, Automobiles, Financial and Food & Beverages. Various international transactions are covered in these agreements. These transactions typically include provisions relating to Manufacturing, Software Development Services, IT enabled Services, Royalty, R&D Services, Marketing Support Services, Distribution, AMP Expenses, Engineering Design and Support Services, Payment of Interest, and many other.
Progression of the APA scheme not only benefits the taxpayers by reducing tax uncertainty but also provides strength to the Government’s plan of encouraging a non-adversarial tax regime. The APA programme in India has been able to address various issues related to complex transfer pricing. They have been able to deal with these issues in a fair and transparent manner thus being appreciable nationally and internationally. The ease of doing business in India has also improved significantly due to this scheme.