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INCOME TAX ADVISORY

ADVANCE PRICING AGREEMENT

Corporate Tax Planning

Corporate Tax Consulting

Corporate Tax Compliance

Direct Tax Advisory

An Advance Pricing Agreement is an agreement between a tax payer and tax authority (i.e., Central Board of Direct Taxes), which determines in advance, the arm’s length price or specifies the manner of the determination of arm’s length price (or both), in relation to an international transaction. Hence, once APA has been entered into with respect to an international transaction, the arm’s length price with respect to that international transaction, for the period specified in the APA, will be determined only in accordance with the APA. The APA process is voluntary and will supplement appeal and other disputes resolution measures for resolving transfer pricing dispute.

The term of APA can be a maximum of 5 years, however there is no minimum period.

KEY BENEFITS OF APA

An APA provides the following benefits-

• Certainty with regard to determination of Arm’s Length Price of the international transactions with respect to which the APA has been entered into (so called “covered transaction”)
• Removal of an audit threat (minimize rigorous of audit) and resolving long drawn and time consuming litigation
• Substantial reduction of compliance costs over the term of the APA; and
• For tax authorities, an APA reduces cost of administration

Consequently, APAs provides a win-win situation for all the stakeholders involved.

Transfer Pricing

Advance Pricing Agreement