The Indian Central Board of Direct Taxes (CBDT) signed 174 Advance Pricing Agreements (APAs) with Indian taxpayers during the 2024-25 tax year, marking the highest number of APAs signed in a single year since the program began. Of these, 65 were bilateral APAs, the result of mutual agreements with countries such as Australia, Japan, South Korea, the Netherlands, New Zealand, Singapore, the United Kingdom and the United States.
This achievement underlines India’s commitment to improving the business environment and facilitating operations for multinational companies involved in cross-border transactions.
What are Advance Pricing Agreements (APAs)?
APAs are contracts between taxpayers and tax administrations that seek to agree in advance on methodologies, prices or profit margins for transactions between related parties. They can be unilateral, bilateral or multilateral, depending on the number of jurisdictions involved.
Importance of APAs
These agreements provide legal certainty to taxpayers, reduce transfer pricing litigation and ensure that international transactions are carried out in accordance with the arm’s length principle. They also facilitate cooperation between tax administrations, promoting transparency and mutual trust.
Conclusion
The record set by India in signing APAs during the 2024-25 fiscal year reflects a global trend towards the search for greater certainty and transparency in international operations. Companies operating in multiple jurisdictions should consider negotiating APAs to ensure regulatory compliance and minimize tax risks.
At TPC Group, we have transfer pricing experts who can advise you on the negotiation and signing of Advance Pricing Agreements tailored to your specific needs. Contact us for more information and to ensure the fiscal stability of your international operations!
Source: Social News