The Central Board of Direct Taxes (CBDT) has received maximum number of advance pricing agreements (APAs) applications from the US in the last five year (2012-13 to 2016-17). The CBDT, the apex policymaking body of the income-tax department, has so far received 42 application for India-US bilateral APAs. In the initial years of the APA programme, the UK and Japan were leading the list because there was no bilateral APA programme available with the US, the CBDT said in the Annual Report (2016-17) on the Advance Pricing Agreement (APA) Programme.
“However, once the USA opened its bilateral APA programme with India in February, 2016, the applications for India-USA bilateral APAs have increased,” it added. The number of bilateral APA applications India received so far from UK and Japan stood at 39 and 17, respectively. An APA is a mechanism to resolve transfer pricing disputes in advance, i.e before the cross-border related party transaction actually takes place.
The APA programme in India was launched in 2012. Under India’s APA programme, it can be multilateral or bilateral involving CBDT and the tax authorities of one or more countries) or unilateral (involving the CBDT only). “Over the last 5 years, 815 applications have been filed in India,” the CBDT said, adding “Majority of these applications (about 85 per cent) are for unilateral APAs between the Indian taxpayer and the CBDT”.
Till April 28, 2017, 154 agreements have been entered into (143 unilateral and 11 bilateral). According to CBDT annual report, almost 50 per cent (70 out of 141) of the total unilateral agreements are with the information technology and banking/finance industries. It pointed out that while India has concluded 152 APAs in 5 years (2012-13 to 2016-17), China has entered into 113 APAs in the ten years between 2005 and 2014.