A Critical Analysis Of The Viability Of Advance Pricing Agreement Regime The Indian Experience PDF Download

The Government of India and the CBDT rolled out one of the most ambitious reforms in 2012 - the introduction of the Advance Pricing Agreement (APA) programme. The intention behind taking this step was to dismantle the idea of India as jurisdiction where the tax administration ran an aggressive transfer pricing regime. This reform was also aimed at providing certainty to MNEs in respect of their transfer pricing of international transactions, while providing them an incentive to invest in India. These ideas have slowly manifested themselves into reality. Hundreds of APAs have been signed in the last seven odd years, which in turn has extended comfort and certainty to MNEs. The complexity of the cases has been proportionally increasing with each passing year. In the year 2018-19 India has undertaken agreements such as, payment of royalty, transfer of intangibles, and Advertisement, Marketing and Promotion (AMP) expenses in respect of international transactions. Concomitantly, the adoption of transfer pricing mechanisms such as profit splitting and CUP became imperative. Ensuring that issues of such complex nature are resolved would bode well for the future of the Programme. Through this paper, the researcher aims to trace the inception, evolution, and the historical background of the Advance Pricing Agreement programme in India. The paper then goes on to look into the procedure and compliance requirements under APAs. The next part of the paper examines the different kinds of agreements, i.e., unilateral and bilateral agreements, and their features and differences. In the next section, the researcher attempts to analyze Indo-USA relations with respect to APAs. Lastly, the paper concludes by appreciating the present position of the APA regime in India, and by presenting some suggestions that would help achieve the objectives more effectively and efficiently for which APA was introduced.