On 31 October 2018, the Central Board of Direct Taxes (CBDT) has signed a unilateral advance pricing agreement (APA) renewal. Accordingly, India reached another milestone as the first ever renewal of a unilateral APA.
This renewal establishes the continued interest of taxpayers in the APA programme as well as the government’s commitment to maintain the APA programme as a mechanism for resolving transfer pricing disputes.
The original APA application was filed by the taxpayer in March 2013, to be applicable for a five-year period that ended in March 2018. The taxpayer sought to renew the APA in February 2018. When the renewal agreement was signed, an additional five years, beginning from FY 2018-19, was allowed.
While this was a “renewal” of an existing APA, the tax authorities undertook a thorough review of the functional analysis and a review of the taxpayer’s operations (including a site visit), and examined details and information about the past years’ operations and the future plans of the taxpayer.
India’s APA programme is in its sixth year of operations, with over 1,000 taxpayer companies having sought APAs, resulting in the completion of over 200 unilateral APAs and 20 bilateral APAs to date.
