New Delhi, April 16 (Agency) In a bid to provide investor-friendly tax regime and promote ease of doing business, the Central Board of Direct Taxes (CBDT) signed 125 Advance Pricing Agreements (APAs) with Indian taxpayers in the financial year 2023-24. The total APAs include 86 Unilateral APAs (UAPAs) and 39 Bilateral APAs (BAPAs). An APA provides certainty to taxpayers in the field of transfer pricing through an agreement in advance. Such agreement is entered into by the CBDT with the taxpayers on the transfer price of international transactions between associated entities. An Unilateral APA involves only the taxpayer and the tax authority of the country where the taxpayer is located.
On the other hand, BAPAs involve the taxpayer, associated enterprise (AE) of the taxpayer in the foreign country, tax authority of the country where the taxpayer is located, and the foreign tax authority. The APA Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arm’s length price of international transactions in advance for a maximum of five future years. “Further, the taxpayer has the option to rollback the APA for four preceding years, as a result of which, tax certainty is provided for nine years. The signing of bilateral APAs additionally provides the taxpayers with protection from any anticipated or actual double taxation,” CBDT said in a media release on Tuesday.
The CBDT said that the number of APAs signed in FY 2023-24 represents a 31% increase compared to the 95 APAs signed during the preceding financial year. “With this, the total number of APAs since inception of the APA programme has gone up to 641, comprising 506 UAPAs and 135 BAPAs,” it said. During FY24, the CBDT also signed the maximum number of BAPAs in any financial year till date. The BAPAs were signed as a consequence of entering into Mutual Agreements with India’s treaty partners namely Australia, Canada, Denmark, Japan, Singapore, the UK and the US. “The APA programme has contributed significantly to the Government of India’s mission of promoting ease of doing business, especially for MNEs which have a large number of cross-border transactions within their group entities,” the CBDT release said.