Advance Pricing Agreement Essay

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An APA is an agreement that determines in advance an appropriate set of criteria (e.g. method, comparables and appropriate adjustments thereto, as well as critical assumptions as to future events) for determining the transfer prices for covered intercompany transactions during a fi xed period of time The arm’s length price of any international transaction, in respect of which the advance pricing agreement has been entered into…shall be determined 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 internal 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 news| * budget 2012| * APA| * ALP By Karishma R Phatarphekar & The recent sixth round of transfer pricing (TP) audits in India saw an accelerated impetus in the scrutiny of inter-company transactions by Indian tax authorities. The adjustments have vaulted to 44,000 crore, which is more than the aggregate income adjustments made by tax authorities in audits of previous four 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, corporate guarantees, intercorporate loans, royalty, intangibles, etc, on

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