The Central Board of Direct Taxes, the policymaking body of the income tax department, said it has outpaced China in signing advanced pricing agreements (APAs) in the last four years. According to a report released by the board on the last five years of APAs, India has concluded 152 APAs compared with China’s113 APAs in the 10 years between 2005 and 2014.
The APA programme was introduced by the Finance Act, 2012. An APA is a mechanism to resolve transfer pricing disputes in advance or before the cross-border related party transaction actually takes place. The transfer price of goods and services transacted between group entities is decided in advance by the tax authorities.
The report encompasses the five years (FY 13-FY 17) of APAs programme. Till the end of FY17, India signed 152 APAs out of which 141 are unilateral. India took 29 months to conclude 141 unilateral APAs which is lower than 34 months average time for the US. Further, during FY2016-17, CBDT signed 80 unilateral APAs as against 53 in previous year which clearly indicates the quicker turn-around by the APA team, the report said.
The board has received maximum number of APA applications from the US in the last five year. 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, it said.