Income Tax - Transfer Pricing - Arm's Length Price - CBDT signs five agreements
THE Central Board of Direct Taxes (CBDT) has signed the first batch of five (5) unilateral Advance Pricing Agreements (APA). The agreements cover a period of five (5) years from AY 2014-15 to AY 2018-19 and specify the arm's length price for the covered international transactions entered into by the taxpayers. These agreements cover a range of international transactions, including interest payments, corporate guarantees, non-binding investment advisory services and contract manufacturing. The agreements pertain to different industrial sectors including pharmaceuticals, telecom, exploration and financial services.
The agreements provide a complete certainty to the taxpayers for five years with regard to the covered international transactions. The APA programme came into effect on 1st July 2012 and the first batch of 146 APA applications was received in March 2013.
The whole scheme of APA has been designed with the intention of creating a taxpayer friendly environment in transfer pricing matters and to minimise the transfer pricing disputes. Before filing the APA applications, taxpayers are given the opportunity to share their expectations from the APA process during the pre-filing consultations and the APA team shares a broader understanding of the forthcoming APA procedure.
Source: PIB Press Release.