The Central Board of Direct Taxes (CBDT) on Friday signed a bilateral Advance Pricing Agreement (APA) with a Japanese company.
“This is India’s first bilateral APA. The APA is for five years,” an official statement said.
APAs will improve the investment climate in the country, it said, adding the APA has been finalised in a period of about one-and-a-half years, which is shorter than time normally taken in finalising APAs internationally.
The scheme has been introduced to bring about certainty and uniformity in transfer pricing matters of multinational companies and reducing litigation.
In the context of growing economic ties between Japan and India, especially after Prime Minister Narendra Modi’s visit to Japan, the APA is expected to generate positive sentiments among Japanese investors in India.
Commenting on the first Bilateral APA between India and Japan, S. P. Singh, Senior Director, Deloitte Haskins & Sells, said transfer pricing had become the most discussed tax topic over the last few years, not only among tax experts and policymakers, but also in corporate board rooms.
Transfer pricing authorities were often considered aggressive and unappreciative of business and economic realities, he said.
