Ease of doing business Current Affairs - 2019
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The Central Board of Direct Taxes (CBDT) has signed seven unilateral Advance Pricing Agreements (APAs) with Indian taxpayers to reduce tax litigation.
With this, CBDT has so far entered into 77 APAs. This includes three bilateral APAs and 74 unilateral APAs.
These 7 APAs signed pertain to various sectors like banking, information technology and automotives. Some of these APAs have rollback provisions.
What is Advance Pricing Agreements (APAs)?
- APA usually is signed between a taxpayer and the central tax authority (in case of India it is CBDT) on an appropriating transfer pricing methodology for determining the value of assets and taxes on intra-group overseas transactions.
- It seeks to introduce certainty in tax law by reducing compliance costs and make tax regime investment friendly.
- It provides certainty to taxpayers regarding transfer pricing that aim to avoid disputes between taxpayer and tax regulator.
- In India, Advance Pricing Agreement mechanism was introduced in 2012 as per the provisions of the Income Tax Act, 1961.
- In case of Indian context, APAs seeks to give (i) Boost to economy and ease of doing business (ii) Provide alternative path to the investors with rollback provision to reduce litigation (iii) Strengthen Government’s mission of fostering a non-adversarial tax regime.
Transfer pricing: It is referred to the fixing of the price for goods and services sold between related legal subsidiaries (entities) within an enterprise.
In the recently released bi-annual Logistics Performance Index (LPI) 2016 of World Bank Group, India ranked 35th among 160 countries.
The index was published in the World Bank bi-annual report ‘Connecting to Compete 2016: Trade Logistics in the Global Economy’. For the third time, Germany has topped in LPI.
- Top 5 countries in 2016 LPI: Germany (score: 4.23 points), Luxembourg (4.22), Sweden (4.20), Netherlands (4.19) and Singapore (4.14).
- India related facts: In the 2016 report, India has increased its LPI score to 3.42 compared to LPI score of 3.08 in 2014.
- In 2016 edition of LPI, India has improved its ranking by jumping 19 positions compared to 54th rank in 2014 LPI.
- Improvement in India’s ranking demonstrates Union Government’s commitment to make it easy to do business in India.
Note: The LPI analyses countries across six components. They are (i) quality of trade and transport infrastructure, (ii) competence and quality of logistics services, (iii) efficiency of customs and border management clearance, (iv) ease of arranging competitively priced shipments, (v) ability to track and trace consignments and (vi) frequency with which shipments reach consignees within scheduled or expected delivery times.