The Central Board of Direct Taxes today singed five unilateral advance pricing agreements (APAs) with Indian taxpayers as it looks to reduce litigation by providing certainty in transfer pricing.
"The five APA agreement agreements cover a range of international transactions, including sale of finished goods, purchase of raw materials, software development services, IT enabled services, exports and interest payment.
"The agreements pertain to different industrial sectors like manufacturing, IT services, etc. The agreements provide certainty to the taxpayers for five years with regard to the covered-international transactions," the finance ministry said in a statement.
With today's signing, the total number of APAs signed so far has reached 108. These include four bilateral APAs and 104 unilateral APAs since 2013-14. Of these,44 APAs have been concluded in seven months of the current financial year itself, it added.
The APA scheme was introduced in the Income-tax Act in 2012 and the Rollback provisions were introduced in 2014.
The Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arm's length price of international transactions in advance for a maximum period of five future years.
Further, the taxpayer has the option to roll back the APA for four preceding years.
Since its inception, the APA scheme has attracted tremendous interest among Multi National Enterprises (MNEs) and more than 700 applications (both unilateral and bilateral) have been filed in just four years, the statement said. PTI BKS .
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