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India signed as many as 67 advance pricing agreements in 2017-18, the CBDT’s second APA Annual Report has revealed.
This was, however, down 27.5 per cent over the APAs signed in 2016-17. The decline could largely be attributed to the complexity of cases increasing and shortage of manpower in the APA team, according to the report.
In 2017-18, of the 67 APAs signed, as many as 58 were unilateral and 9 were bilateral. Including the 67 APAs signed in 2017-18, the total number of APAs signed by India till date in six years (FY12-13 to FY 17-18) stood at 219 (199 unilateral and 20 bilateral).
An APA is an agreement between a taxpayer and the tax authority concerning the transfer pricing method and the rate applicable to the taxpayers’ inter-company transactions, and normally covers multiple years.
The report also indicates that average time to conclude 58 unilateral APAs in 2017-18 was 38.62 months (which is more than the combined average time taken in previous 4 years).
However, in what is seen as credible achievement, more than 70 per cent of the unilateral APAs entered into have been concluded within 3 years of the filing of applications and more than 25 per cent have been entered into within 2 years.
The CBDT report also reveals that the filing of bilateral APA applications has more than doubled in 2017-18 (as compared to 2016-17). Almost 75 percent of the total bilateral APA applications are with only 3 countries — the US, the UK and Japan.
Interestingly, the report highlighted that “it is conservatively estimated that the 219 signed APAs have resulted in additional income of about ₹10,000 crore. This translates to a tax payment of about ₹3,000 crore without getting into any litigation or there being any dispute”
‘Fared better’
Commenting on the CBDT’s APA annual report, Tarini Nijhara, Director, Transfer Pricing, Nangia Advisors LLP, said the impressive APA statistics suggest that India has fared better than many other countries on various counts and the Government’s resolve of fostering a non-adversarial tax regime.
She also said the doubling of bilateral APA applications in 2017-18 is an encouraging trend as a bilateral resolution not only fosters an appropriate environment for the businesses to grow by weeding out uncertainty but, also help businesses avoid double taxation.
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