The Central Board of Direct Taxes (CBDT) has entered into a record 95 Advance Pricing Agreements (APAs) with Indian taxpayers in the fiscal year 2022-23, the Ministry of Finance said on Friday.
Out of these, 63 agreements are Unilateral APAs (UAPAs), and the remaining 32 are Bilateral APAs (BAPAs). As a result, the total number of APAs has now increased to 516 since the initiation of the APA programme. Out of these, 420 are UAPAs, and 96 are BAPAs.
In a statement, the Ministry of Finance said, "The year has been a record-breaking year in several ways. This year, CBDT recorded the highest ever APA signings in any financial year since the launch of the APA programme, signing a total of 95 APAs. This year, CBDT also signed the maximum number of BAPAs in any financial year till date."
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"The BAPAs were signed as a consequence of entering into Mutual Agreements with India’s treaty partners namely Finland, the UK, the US, Denmark, Singapore, and Japan. A record of the largest number of single day signings in the history of the programme was also created with a total of 21 APAs signed on March 24, 2023," it added.
The aim of the APA scheme is to provide clarity and predictability to taxpayers regarding transfer pricing by outlining the methods for pricing and determining the arm's length price of international transactions in advance for up to five years.
Taxpayers can also opt to apply the APA to the previous four years, resulting in tax certainty for a total of nine years. Additionally, signing bilateral APAs can protect taxpayers from anticipated or actual double taxation.
This program has significantly contributed to the Indian government's mission of promoting ease of doing business, particularly for multinational enterprises with numerous cross-border transactions between their group entities, the ministry said.
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