APAs Current Affairs

Government inks 16 APAs in March 2018

The Central Board of Direct Taxes (CBDT) has entered into 14 Unilateral Advance Pricing Agreements (UAPA) and 2 Bilateral Advance Pricing Agreements (BAPA) in March 2018. The 2 bilateral APAs were entered into with US . With the signing of these Agreements, CBDT has entered total 219 APAs. This includes 199 Unilateral APAs and 20 Bilateral APAs. Of this, 67 APAs (58 Unilateral and 9 Bilateral) were signed in FY 2017-18.

Key Facts

The 16 APAs entered into during March, 2018 pertain to various sectors of economy like Information Technology, Telecommunication, Pharmaceutical, Automobile, Beverage, Trading, Manufacturing and Banking, Finance and Insurance.

The international transactions covered under them include payment of royalty fee, provision of corporate guarantee, business support services, marketing support services, engineering design services, engineering support services, contract manufacturing, merchanting trade of agro commodity, import/export of components, provision of IT services, ITES, investment advisory services, availing of technical services, etc.

Advance Pricing Agreement (APA) Scheme

The APA scheme launched by Government endeavours to provide certainty to taxpayers in domain of transfer pricing by specifying methods of pricing and setting prices of international transactions in advance. Its provision was introduced in Income-tax Act, 1961 in 2012 and Rollback provisions to it were introduced in 2014.

The scheme aims to strengthen Government’s resolve of fostering non-adversarial tax regime. It has significantly contributed towards improving ease of doing business in India and has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

Significance

APA gives certainty to MNCs that agree on certain principles in valuation of their cross-border transactions. They also provide assessees with alternate dispute resolution mechanism with respect to transfer pricing. It helps in determining arm’s length price of international transactions in advance for maximum period of five future years.

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CBDT achieves important milestone of signing 200 APAs

The Central Board of Direct Taxes (CBDT) has crossed an important milestone of having signed 200 Advance Pricing Agreements (APAs). It was achieved after it entered into seven more APAs in February 2018.

All the seven were Unilateral APAs and pertain to pharmaceuticals, automobiles, financial and food & beverages sectors of the economy. With this, CBDT till has entered into 203 APAS (185 Unilateral and 18 Bilateral APAs).

Key Facts

The APAs signed so far covers international transactions in manufacturing, provision of software development services, provision of IT enabled Services (ITES), provision of contract R&D Services, payment of royalty, Distribution, provision of marketing support services, AMP expenses, provision of engineering design support services, provision of sourcing support services, payment of interest, etc.

Advance Pricing Agreement (APA) Scheme

The APA scheme endeavours to provide certainty to taxpayers in domain of transfer pricing by specifying methods of pricing and setting prices of international transactions in advance. Its provision was introduced in Income-tax Act, 1961 in 2012 and Rollback provisions were introduced in 2014.

The scheme aims to strengthen Government’s resolve of fostering non-adversarial tax regime. It has significantly contributed towards improving ease of doing business in India and has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

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