100 Transfer Pricing Disputes with U.S. Resolved, Says CBDT

NEW DELHI: The Central Board of Direct Taxes (CBDT) today said it has resolved as many as 100 transfer pricing disputes with the U.S., which will lead to an environment of "tax certainty and encourage MNCs" to do business in India.

The resolution of such issues, CBDT said further, follows the framework agreement signed with U.S. revenue authorities in January last year.

Aimed at boosting investment sentiment, the pact seeks to resolve some 200 transfer pricing disputes in IT (software development) and ITeS.

"More than 100 cases have already been resolved and some more are expected to be resolved before the end of this fiscal," CBDT said in a statement.

The agreement with the U.S. was finalised under the Mutual Agreement Procedure (MAP) provision in the India-U.S.A Double Taxation Avoidance Convention.

It further said MAP programmes with other countries such as Japan and the UK are progressing well with regular meetings and resolution of past issues.

CBDT said a combination of a robust advance pricing agreement (APA) programme and a streamlined MAP would be helpful in creating "an environment of tax certainty and encourage MNCs to do business in India".

Earlier, the U.S. bilateral APA programme was not applicable to India.

"The success of the framework agreement in a short period of one year has led to U.S. revenue authorities opening up their bilateral APA programme to India. The U.S. is expected to begin accepting bilateral APA applications shortly," it said.

APA, which was introduced in the Income Tax Act in 2012, provides for signing of an agreement between a taxpayer and the IT department on an appropriate transfer pricing methodology for determining the value of assets and ensuing taxes on intra-group overseas transactions.

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