What are UAPAs and BAPAs? 5 UAPAs and 2 BAPAs Signed by CBDT in January, 2018 (Download PDF)

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The Central Board of Direct Taxes (CBDT) entered into five Unilateral Advance Pricing Agreements (UAPA) and two Bilateral Advance Pricing Agreements (BAPA) during January 2018. The total number of Advance-Pricing Agreement (APAs) entered into by the CBDT is now 196.

Image of Advance Pricing Agreement

Image of Advance Pricing Agreement

Image of Advance Pricing Agreement

  • 196 APAs include 178 Unilateral APAs and 18 Bilateral APAs.

  • In current financial year, 44 APAs (7 Bilateral and 37 Unilateral) have been signed.

  • 2 Bilateral Agreements signed in the month of January include the first BAPA signed with USA.

Details of Unilateral APAs Signed in January

The APAs cover sectors of:

  • Banking

  • Insurance

  • Investment Advisory

  • Information Technology

  • Chemicals and Engineering

They cover international transactions pertaining to:

  • provision of IT enabled services

  • provision of software development services

  • contract manufacturing

  • payment of royalty

  • sale of goods

What is ‘Advance-Pricing Agreement’?

  • An APA is a contract for multiple years, between a taxpayer and at least one tax authority specifying the pricing method that the taxpayer will apply to its related-company transactions.
  • These programs are designed to help taxpayers voluntarily resolve actual or potential transfer pricing disputes in a proactive, cooperative manner, as an alternative to the traditional examination process.

Benefits of APA?

  • Provide certainty to taxpayers

  • Reduce disputes

  • Enhance tax revenues

  • Make country an attractive destination for foreign investments

  • As agreements are binding both on the taxpayer as well as the government hence reduce complaints and litigation costs.

  • Progress of APA schemes removes adversarial tax regime

  • Indian APA programs are appreciated nationally and internationally for addressing complex transfer pricing issues in a fair and transparent manner.

What is Unilateral APA?

  • An agreement with only one government authority to have tax certainty in that country is called Unilateral APA.

What is Bilateral APA?

  • When the competent authorities of two countries negotiate in advance to determine the arm’s length price (ALP) of the future international transaction, it is called bilateral APA.

What is ALP?

  • ALP is used to decide what price should be charged by related parties, that is, the price two unrelated parties would charge under similar circumstances.

  • There are various methods to determine ALP, yet, there is no scientific way to calculate an exact one.


  • On March 31,2014, India signed its first batch of five advance-pricing agreements (APAs) with multinational companies.

  • The concept of Advanced Pricing Agreement (APA) was introduced in India via the Finance Act 2012.

  • The sole objective of the APA is to bring tax certainty in international transactions and overcome the issues due to transfer pricing between related parties.

What is CBDT?

  • The Central Board of Direct Taxes is a statutory authority functioning under the Central Board of Revenue Act, 1963.

- Published/Last Modified on: April 15, 2018

Policy/Governance, Economy

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