India and the UK have signed two bilateral advance pricing agreements (APAs) to resolve transfer pricing disputes, the first such agreements between the nations, India’s Central Board of Direct Taxes (CBDT) announced February 1.
The bilateral APAs address transfer pricing of management and services charges and royalty payments. They also both include a rollback provision. Further, both agreements were signed following the resolution of transfer pricing disputes concerning the same transaction under the India-UK tax treaty’s mutual agreement procedure (MAP).
As a result of the MAP agreements, the APAs, and rollback, 12 years of transfer pricing controversy has been settled for each Indian company, the CBDT said.
India has signed one other bilateral APA since its APA program launched in 2013: a five year agreement with Japan, agreed to in 2014.
Just last week India announced that it will soon begin bilateral APA negotiations with the US; APA negotiations between the countries have been stalled since 2013.
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