India, US agree to resolve 100 cases under MAP

The Dollar Business Bureau

India and the USA in October held the Bilateral Competent Authority Mutual Agreement Procedure (MAP) / Advance Pricing Agreement (APA) meeting to resolve MAP cases pending for a long time and to achieve significant developments in Bilateral APA Process, Indian Ministry of Finance announced on Thursday.

During the meeting, the two sides agreed to resolve 66 MAP cases pertaining to transfer pricing issues and 42 MAP cases pertaining to treaty interpretation issues. The total amount in dispute was about Rs. 5,000 crore, all reported during the assessment years 1999-2000 to 2011-12.

The resolved cases focused on several issues such as transfer pricing adjustments made to the international transactions in terms of payment of royalty, payment of management fees, cost contribution arrangements, engineering design services, contract R&D services, investment advisory services, marketing support services, software development services, IT-enabled services (both BPO and KPO services) etc.

Other paramount issues consisted of treaty interpretative in nature of presence of permanent establishment (PE) in India and profit attribution to such PEs, disputes pertaining to royalty income v/s business income of foreign companies.

The two countries also agreed on the terms & conditions of the first ever Bilateral APA involving India and USA.

Although, India initiated its bilateral APA process with the US by accepting applications from the Indian taxpayers starting from 2012-13, the USA started the same with India by way of accepting applications from US taxpayers in February 2016.

“The speedy resolution of cases and agreement on Bilateral APA due to effective mechanism of development of mutual trust and cooperation between the Competent Authorities of two countries would really be a positive factor in creating a conducive atmosphere for investments and business by US Companies in India,” said the finance ministry.