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India signs Advance Pricing Agreements with Britain

New Delhi, Feb 1 (IANS) India has signed two bilateral Advance Pricing Agreements (APA) with Britain, said the Central Board of Direct Taxes (CBDT) here on Monday.

In statement issued here, the CBDT said it has entered into two bilateral APAs with Britain on January 29.

“With this signing, CBDT has concluded three bilateral APAs – the first one being a bilateral APA signed with Japan in December 2014,” the statement said.

According to the statement, the two bilateral APAs were signed with two Indian group entities of a Britain-based multi-national company (MNC).

The APAs have been entered into soon after the competent authorities of India and Britain finalised the terms of the bilateral arrangement under the Mutual Agreement Procedure (MAP) process contained in the India-UK DTAA (Double Taxation Avoidance Agreement).

The APAs cover the period 2013-14 to 2017-18 and also have a “rollback” provision for 2 years (2011-12 and 2012-13).

With the signing of the bilateral APAs, the two Indian companies have been provided with tax certainty for 12 years each (5 years under MAP and 7 years under APA). This is a significant step towards providing a stable and predictable tax regime.

The two APAs are also significant because they address the issues of payment of management and service charges and payment of royalty. These transactions generally face prolonged and multi-layered transfer pricing disputes.

With this signing, CBDT has so far signed 41 APAs out of which 38 are unilateral and 3 are bilateral, the statement said.