Opinion: Fast-tracking APAs
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- By Taxmann
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- Last Updated on 19 January, 2022
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Sanjay Kumar, Partner, Deloitte India – [2022] 134 taxmann.com 172 (Article)
In 2012, the Government of India introduced an important tax dispute prevention mechanism, Advance Pricing Agreement (APA), for cross-border related party transactions. This was particularly important for new and prospective investments, in particular for Multinational Enterprises (MNEs) who otherwise were suffering considerable tax adjustments [i.e., transfer pricing (TP) adjustments] ever since TP rules were brought in the tax statute in 2001.
The government accorded great significance to the APA programme and considered it a flagship programme. Having received about 1,300 applications, the programme has been quite popular so far. More than 370 APAs have been signed so far, providing tax certainty to MNEs on intra-group international transactions for 5 prospective years and for a possible 4 previous years, counted from the date of filing the application. These numbers do include about 50 bilateral APAs, which allow double taxation avoidance also, under the tax treaties with various countries.
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