Three Bilateral Advance Pricing Agreements (APA) signed by India and UK (Download PDF)

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Earlier both countries had exchanged agreements under the Mutual Agreement Procedure (MAP)- Article of the India-UK Double Taxation Avoidance Convention (DTAC). With this, CBDT (Central Board of Direct Taxes, Government of India) so far has entered into 111 APAs.

Flag of India and UK

Flag of India and UK

Flag of India and UK

  • The Central Board of Direct Taxes (CBDT) signed three Bilateral Advance Pricing Agreements (APAs) with the Competent Authority of United Kingdom (UK) to reduce tax litigation.
  • 3 APAs cover international transactions for payment of intra-group service charges and pertain to the telecom industry.
  • They also have a rollback provision.

Highlights of APA Programme

  • An APA usually signed between taxpayer and central tax authority on an appropriating transfer pricing methodology.
  • Determines the value of assets and taxes on intra-group overseas transactions.
  • Provides certainty in tax law by reducing compliance costs and make tax regime investment friendly.
  • Certainty to taxpayers regarding transfer pricing which avoids disputes between taxpayer and tax regulator.
  • Entered for a maximum of 5 years at a time.
  • Finance Act, 2012 aims to provide a predictable and non-adversarial tax regime in Indian transfer pricing arena, with the APA Programme.
  • Rollback of APAs announced in the Budget of July 2014.

Benefits of APAs

  • Provide alternative path to the investors with rollback provision to reduce litigation.
  • Boost to economy and ease of doing business.
  • Strengthen Government’s mission of fostering a non-adversarial tax regime.

- Published/Last Modified on: November 21, 2016

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