The Central Board of Direct Tax (CBDT) released the second annual report (2017-18) of its advance pricing agreement (APA) programme on 31 August 2018. The report introduced a report card of the performance of the programme along with qualitative and statistical analysis. Since the programme’s inception in 2012, the Indian government has concluded 219 APAs (199 unilateral and 20 bilateral) covering a wide range of industries, transactions, and jurisdictions, the report reveals. A total of 985 APA applications (821 unilateral and 164 bilateral) have been filed since the program began.

During the most recent period reported, FY 2017-18, 168 APA applications (115 unilateral, 53 bilateral) filed and 67 APAs (58 unilateral, eight bilateral) were concluded, the report states. The list of APAs concluded in 2017-18 also includes the highly disputed transaction of incurring of advertisement, marketing and promotion (AMP) expenses which was covered in a unilateral APA.

The number of APA applications filed in FY 2017-18 includes renewal applications for the first cycle of APAs expiring in FY 2017-18. This reflects on the largely positive experiences and confidence of MNEs from the APA programme.

As the APA programme leaves a global footprint, of the 134 countries where the associated enterprises of Indian applicants are located, the United States tops the list with 40 entities, followed by the UK, Singapore, and Germany.

The transactional net margin method is adopted in 70% of the international transactions in unilateral APAs and 95% in bilateral APAs entered into in 2017-18. In 2017-18, the 58 unilateral APAs entered into cover transactions with 134 countries where the affiliates of the Indian applicants are located.

The average time for unilateral APAs in 32 months and bilateral APAs in 42 months is better than the global average. The shortest time to complete an APA was less than 12 months and the longest time to the date was 49 to 60 months.