Monthly Archives: May 2013

  • Guidance to Advance Pricing Agreement (APA) with FAQs

    May 30 2013

    Off late, the increase in the number of litigation in transfer pricing arena,  both domestically as well as globally, has been quite astonishing. To bring about a certainty & uniformity in    the application of transfer pricing provisions and determination of arm's length price in India, Government of India vide Finance Act, 2012 brought about a new provision/concept of Advance Pricing Agreement (APA) for international transactions. The rules for implementing this new APA program were issued on 30th August, 2012.

    Now to increase awareness of the taxpayers about the  new APA program and its implementation, the CBDT has released a booklet called the APA Guidance Booklet with FAQs (APA Guidance). The APA Guidance deals with the procedure to be followed by a taxpayer and the tax authorities before a taxpayer can enter into an APA. The FAQs section in the APA Guidance provides clarifications on certain general issues raised by the taxpayers with regard to the APA process, disclosure requirements in the application, critical assumptions, detailed functions performed, assets employed and risks assumed (FAR) analysis, conversion of a unilateral APA to a bilateral/multilateral APA, amendment/renewal/withdrawal of an APA, profit attribution to Permanent Establishments (PE) and the impact of an APA on the actions of the Assessing Officer/Transfer Pricing Officer. The FAQs section of the Guidance also provides clarifications on the procedural and documentary  information required to be provided to the APA authorities.

    Read More