India-Japan Agree New Advance Pricing Agreement
India has signed a bilateral advance pricing agreement with the Indian subsidiary of a Japanese company, India’s Central Board of Direct Taxes (CBDT) has announced.
The APA was signed on January 13. With this, India and Japan have concluded three bilateral APAs, all of which include roll-back provisions. Overall, the CBDT has signed eight bilateral APAs and expects more APAs to be concluded and signed in the near future.
The APA scheme was introduced in the Income Tax Act in 2012 and rollback provisions were newly permitted from 2014.
The CBDT said: “Signing of bilateral APA is an important step towards ascertaining certainty in transfer pricing matters of multinational company cases and dispute resolution. A bilateral APA may be preferred by multinational companies since finalization of the same involves reaching an understanding between the tax administrations of the two countries and for the transfer pricing adjustment done in the hands of the Indian entity, corresponding adjustment is available in the hands of related foreign entity, thereby relieving economic double taxation.”
“The progress of the APA scheme strengthens the Government’s mission of fostering a non-adversarial tax regime,” it added.