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Advance Pricing Agreement Transfer Pricing Case Study

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May 5, 2021

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4 mins read

Advance Pricing Agreement (APA) Transfer Pricing – International Taxation Case Study

Identify which of the APA can be entered into in the following cases : –

Particulars Country A Country B Country C
Indian Treaty Yes No Yes
Relevant MAP Article 25 NA – However, Country B – USA Treaty has a MAP Article No
APA Program in other country Yes Yes Yes

Advance Pricing Agreement (APA) Transfer Pricing – Solution:

International Taxation Services

Request for bilateral or multilateral APA can be accepted by the Indian competent authority , where the following conditions are satisfied : –

a) India has a tax treaty (i.e., DTAA) with the Other Contracting State,
b) Such DTAA has an Article on ‘Mutual Agreement Procedure’ (MAP);
c) The other country also has a corresponding APA program

If these conditions are not satisfied, the BILATERAL OR Multilateral APA cannot be entered into. However, the taxpayer can still out for a unilateral APA.

Particulars Country A Country B Country C
Indian Treaty Yes No Yes
Relevant MAP Article 25 NA – However, Country B – USA Treaty has a MAP Article 26
Unilateral APA Yes Yes Yes
Multilateral APA Yes No – Since no Treaty exists No – Since MAP Article does not exists
Bilateral APA Yes No – Since no Treaty exists No – Since MAP Article does not exists

For any queries, please write them in the Comment Section or Talk to our tax expert

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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