India to accept transfer pricing APA, MAP applications even if corresponding adjustment treaty provision absent

The Indian government today clarified that it will accept transfer pricing mutual agreement procedure (MAP) cases and bilateral advance pricing agreement applications in situations where the applicable tax treaty does not include a provision comparable to Article 9(2) of OECD Model Tax Commentary, providing for corresponding adjustments.

A Central Board of Direct Taxes release said its clarification applies in cases where the associated enterprise of an Indian entity is resident of a country with which India has tax treaty but the treaty does not have corresponding adjustment provision.

A corresponding adjustment provision allows a tax authority to adjust taxable profits to mitigate or eliminate double taxation arising from a primary transfer pricing adjustment made by a second tax jurisdiction.

 


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