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India signs Advance Pricing Agreements with Netherlands

December 01
21:52 2017

New Delhi, Dec 1 (IANS) India has entered into its first bilateral Advance Pricing Agreements (APAs) with the Netherlands during November, an official statement said on Friday.

The two APAs pertain to the electronics and technology sectors, a Finance Ministry release said here.

“With the signing of these agreements, the total number of APAs entered into by the Central Board of Direct Taxes (CBDT) has gone up to 186. This includes 171 unilateral APAs and 15 bilateral ones,” it said.

The transactions covered in the agreements with the Netherlands include distribution, provision of marketing support Services, provision of business support services, among others, it added.

The APA scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance.

The APA provisions were introduced in the Income Tax Act in 2012 and the “rollback” provisions were introduced in 2014.

Bilateral APAs include a rollback option which enhances certainty for such taxpayers for up to 9 years and allows them to seek assurance on their past years’ transfer pricing positions as well.

Since its inception, the APA scheme has been well-accepted by taxpayers and has resulted in more than 800 applications (both unilateral and bilateral) being filed so far in five years, the ministry said.

“The progress of the APA scheme strengthens the government’s resolve of fostering a non-adversarial tax regime. The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner,” it added.

Earlier this week, the CBDT said it will accept transfer pricing applications for mutual agreement procedure and bilateral advance pricing agreement regardless of presence of a specific provision in the double taxation avoidance agreements.

The provision relates to claiming corresponding tax adjustments.

A Finance Ministry release had said the issue had arisen in cases where the associated enterprise of the Indian entity is resident of a country with which India has entered into a DTAA without the provision relating to “corresponding adjustment”, or tax relief, which allows taxpayers to claim corresponding tax adjustments in case of transfer pricing disputes arising from cross-border transactions.

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