Advance Pricing Agreement

An APA is an agreement that
de terminationines in advance an appropriate
set of criteria (e.g. method, comparables
and appropriate adjustments thereto, as
tumefy as critical assumptions as to future
events) for determining the steer
prices for covered intercomp whatsoever
proceedings during a fi xed period of
time

The arms length price
of any international transaction, in
respect of which the advance set
agreement has been entered into…shall
be inflexible in accordance with the
advance pricing agreement so entered.
(Direct Taxes Code [the DTC], Sec.
118(3))

In India, the Board will limit the term of
an APA to fi ve years (DTC, Sec. 118(4)),

The APA process is not
an audit, and that should
be stated clearly to both
innate and external
stakeholders.

Budget 2012: Advance pricing agreements to end transfer pricing disputes
Mar 10, 2012, 03.58AM IST

Tags:
* Karishma R Phatarphekar & Shefali Shah|
* Grant Thornton India LLP|
* DTC|
* budget word of honor|
* budget 2012|
* APA|
* ALP
By Karishma R Phatarphekar &
The recent ordinal round of transfer pricing (TP) audits in India saw an quicken impetus in the scrutiny of inter-company transactions by Indian tax authorities.



The adjustments construct vaulted to 44,000 crore, which is more than the aggregate income adjustments do by tax authorities in audits of previous quadruple years.

Tax authorities have taken aggressive, provocative and industry-wise positions that have jolted the entire fraternity of the multinational companies (MNCs).
Even to this day, the transfer pricing disputes revolve around very basic issues such as use of data not available in the public domain, selection of comparables and non-contemporaneous data. Other areas for transfer-pricing disputes are valuation of shares, integrated guarantees, intercorporate loans, royalty, intangibles, etc, on which there is no statutory guidance.
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