India Signs Three Further APAs During December
India entered into three more advance pricing agreements in December, with two unilateral agreements and a bilateral APA concluded with authorities in the United Kingdom.
With the signing of these agreements, the total number of APAs entered into by the Central Board of Direct Taxes totals 189, comprising 173 unilateral APAs and 16 bilateral APAs.
According to the CBDT, the three most recent APAs relate to organizations within the electronics, coal, and insurance sectors.
It further explained that “the international transactions covered in these agreements include [the] provision of software development services, [the] provision of IT enabled services, trading, etc.”
By entering into APAs, the Indian Government is seeking to provide certainty to taxpayers in relation to transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance.
The tax authority recently expressed its willingness to accept mutual agreement procedure (MAP) and bilateral advance pricing agreement (APA) requests even where the relevant country’s bilateral double tax treaty with India lacks provisions on corresponding adjustments.
The CBDT explained that: “A number of references have been received from time to time regarding the acceptance of applications pertaining to transfer pricing MAP cases and bilateral APAs where the associated enterprise of the Indian entity is resident of a country with which India has entered into a double taxation avoidance agreement (DTAA) but the agreement does not contain Article 9(2) (or its relevant equivalent Article) relating to corresponding adjustment.”
“The matter has been examined by the CBDT and it has been decided to accept transfer pricing MAP and bilateral APA applications regardless of the presence or otherwise of Article 9(2) (or its relevant equivalent Article) in the DTAAs.”