Govt looks to resolve 100 transfer pricing agreements by March next year
MUMBAI: With a hope of improving India’s image on ease of doing business, the government has increased the pace of resolving transfer pricing issues and is looking to sign around 100 advance pricing agreements by the end of March 2017, people in the know said.
Central Board of Direct Taxes (CBDT) in last two months signed 10 APAs and 44 APAs since April this year. If the government achieves the 100 mark, it would be the highest number of APAs signed India in a year.
An APA determines the transfer pricing methodology and taxation rate on an international transaction. Transfer pricing relates to transactions among units of a company. In July 2012, the government introduced the APA programme, which allows companies and the revenue authorities to negotiate the rate at which tax is to be paid and avoid disputes.
Transfer pricing disputes in this sector are mainly related to outsourcing and the calculation of profit made by companies. Many firms have gone to court challenging the government’s transfer pricing adjustments.
According to people in the know, the 10 APAs signed in the last two months relate to purchase of raw material and sale of goods in the case of a manufacturing company, IT and ITeS, investment advisory, sourcing services and interest payments.
