Why in news?
- Signed by CBDT with a Japanese company in Dec 2014
- for five years
- to provide a predictable transfer pricing regime
- will reduce litigation
An APA is
- a negotiated deal between a taxpayer and the tax authorities -that sets out beforehand the method of determining the transfer pricing for transactions between a subsidiary and its foreign parent.
Transfer pricing refers to the pricing of assets, "tangible and intangible," services, and funds that are transferred within an organisation in a cross-border transaction or simply put, pricing method that the taxpayer will apply to its related-company transactions
Benefits of APA
- These programmes are designed to help taxpayers voluntarily resolve actual or potential transfer
pricing disputes in a proactive, cooperative manner, as an alternative to the traditional examination process.
- It provides greater certainty on the transfer pricing method adopted, mitigating the possibility of disputes and facilitating the financial reporting of potential tax liabilities.
- Importantly, an APA also reduces the incidence of double taxation, and the costs associated with both audit defence and documentation preparation.
- Signed by CBDT with a Japanese company in Dec 2014
- for five years
- to provide a predictable transfer pricing regime
- will reduce litigation
An APA is
- a negotiated deal between a taxpayer and the tax authorities -that sets out beforehand the method of determining the transfer pricing for transactions between a subsidiary and its foreign parent.
Transfer pricing refers to the pricing of assets, "tangible and intangible," services, and funds that are transferred within an organisation in a cross-border transaction or simply put, pricing method that the taxpayer will apply to its related-company transactions
Benefits of APA
- These programmes are designed to help taxpayers voluntarily resolve actual or potential transfer
pricing disputes in a proactive, cooperative manner, as an alternative to the traditional examination process.
- It provides greater certainty on the transfer pricing method adopted, mitigating the possibility of disputes and facilitating the financial reporting of potential tax liabilities.
- Importantly, an APA also reduces the incidence of double taxation, and the costs associated with both audit defence and documentation preparation.
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