CBDT signs 4 unilateral APAs pertaining to various sectors

The Dollar Business Bureau

The Central Board of Direct Taxes (CBDT) has inked four unilateral Advance Pricing Agreements (APAs) in the past two days relating to several sectors including information technology (IT), pharmaceuticals and construction. 

“CBDT has entered into four more unilateral APAs on November 22 & 23, 2016. The international transactions covered in these agreements include software development services, IT enabled services (BPOs), engineering design services, contract R&D services and marketing support services," an official statement said on Wednesday.

“Some of the given agreements have also a provision to rollback,” it said. 

With the signing of these four agreements, the total tally of APAs the CBDT has entered into reached 115. These consist of 108 unilateral and seven bilateral APAs so far. During the current fiscal, the CBDT has signed a total of 51 APAs including 47 unilateral and four bilateral APAs. 

The scheme of APA was incorporated in 2012 in the Income-Tax Act and the provisions for ‘rollback’ were introduced in 2014. The main purpose of the scheme is to provide certainty to taxpayers in the area of transfer pricing by mentioning the ways of pricing and setting in advance the prices of foreign transactions. 

Since the APA scheme has been introduced, it has shown a lot of interest from the taxpayers and as a result, more than 700 applications (unilateral as well bilateral) have been filed in the last four years. 

The progress of the scheme supports the mission of the government to foster a non-adversarial regime of tax. 

“The functioning and approach of the officers in the APA teams have been acknowledged and appreciated by the industry in the country as well as abroad. The CBDT is expecting more APAs would be signed and concluded in the near future,” said the statement.