Tax department, Japanese company sign advance pricing pact

Tax department, Japanese company sign advance pricing pact

The tax department signed a Bilateral Advance Pricing Agreement (BAPA) with Indian subsidiary of a Japanese trading company to include rollback provisions to reduce litigations by providing certainty in transfer pricing on January 13, 2017 . Now the total number of BAPAs entered into by the CBDT is

increased to 8.

Highlights :

BAPA is an important step towards ascertaining transfer pricing matters of multinational company cases and dispute resolution.

Under BAPA, certainty in tax treatment is provided for the next five years while rollback provides dispute redressal for a maximum of four past years preceding APA years.

It will strengthens the government’s mission of fostering a non-adversarial tax regime.

Advance pricing agreement(APA):

♦ An advance pricing agreement (APA) is an ahead-of-time agreement between a taxpayer and a tax authority on an appropriate transfer pricing methodology (TPM) for a set of transactions at issue over a fixed period of time.

♦ The concept of Advanced Pricing Agreement (APA) was introduced in India via the Finance Act 2012.