India’s Ministry of Finance recently issued a press release announcing that the Central Board of Direct Taxes (CBDT) had entered into a record 125 advance pricing agreements (APAs) during fiscal year 2023-24, including 86 unilateral APAs (involving only the taxpayer and the Indian tax authorities) and 39 bilateral APAs (involving the taxpayer and its associated enterprise, and the tax authorities of both countries).
This marks the highest-ever number of APA signings in any fiscal year since the launch of the APA programme in India in 2012, and represents a 31% increase compared to the previous fiscal year, when a total of 95 APAs were signed.
With the closure of yet another successful year for APA signings, the total number of concluded APAs in India since the inception of the programme now stands at 641, comprising 506 unilateral APAs and 135 bilateral APAs.
The signing of 39 bilateral APAs in a year is also the maximum number of such agreements that India has signed in any single year. This is a testimony to India’s efforts towards negotiating and entering into mutual agreements with its treaty partners, specifically, Australia, Canada, Denmark, Japan, Singapore, the UK, and the U.S.
APAs endeavour to provide certainty to taxpayers in the domain of transfer pricing by specifying the pricing method and determining the arm's length price of international transactions in advance for a maximum of five future years. Moreover, taxpayers that enter into an APA have the option to roll back the APA to four preceding years, as a result of which, tax certainty can be achieved for nine years at one go.
These APA signings provide a credible example of how the Indian tax authorities and taxpayers have collaborated to find solutions to transfer pricing disputes. It is important to sustain this momentum as it creates a win-win situation for all stakeholders and fosters certainty. Year-on-year growth in the number of APAs signed every year bears testimony to the fact that the Indian APA programme has grown and evolved since its inception.
Jiger Saiya
BDO in India
This marks the highest-ever number of APA signings in any fiscal year since the launch of the APA programme in India in 2012, and represents a 31% increase compared to the previous fiscal year, when a total of 95 APAs were signed.
With the closure of yet another successful year for APA signings, the total number of concluded APAs in India since the inception of the programme now stands at 641, comprising 506 unilateral APAs and 135 bilateral APAs.
The signing of 39 bilateral APAs in a year is also the maximum number of such agreements that India has signed in any single year. This is a testimony to India’s efforts towards negotiating and entering into mutual agreements with its treaty partners, specifically, Australia, Canada, Denmark, Japan, Singapore, the UK, and the U.S.
APAs endeavour to provide certainty to taxpayers in the domain of transfer pricing by specifying the pricing method and determining the arm's length price of international transactions in advance for a maximum of five future years. Moreover, taxpayers that enter into an APA have the option to roll back the APA to four preceding years, as a result of which, tax certainty can be achieved for nine years at one go.
BDO in India Comments
In the 12 years since the APA programme was launched, APAs have emerged as a leading tool for multinational enterprises to achieve tax certainty in India.These APA signings provide a credible example of how the Indian tax authorities and taxpayers have collaborated to find solutions to transfer pricing disputes. It is important to sustain this momentum as it creates a win-win situation for all stakeholders and fosters certainty. Year-on-year growth in the number of APAs signed every year bears testimony to the fact that the Indian APA programme has grown and evolved since its inception.
Jiger Saiya
BDO in India