CBDT signs advance pricing agreement with Japanese firm

To provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing
The Central Board of Direct Taxes (CBDT) has entered into an advance pricing agreement (APA) with an Indian subsidiary of a Japanese trading company to foster a non-adversarial tax regime.

“Signing of this bilateral APA is an important step towards ascertaining certainty in transfer pricing matters of multinational company cases and dispute resolution,” said a statement issued here by the Finance Ministry under which the CBDT functions.

The agreement was signed on August 2.

The 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.

“The progress of the APA scheme strengthens the government’s mission of fostering a non-adversarial tax regime,” the statement said.

Overall, it is fourth bilateral APA signed by the CBDT. The APA scheme was introduced in the Income Tax Act in 2012.

The CBDT expects more APAs to be signed in the near future, it said.