The Central Board of Direct Taxes has signed a bilateral Advance Pricing Agreement (APA) with the subsidiary of a Japanese company as it looks to reduce litigations by providing certainty in transfer pricing.
The total number of bilateral APAs signed with various Japanese subsidiaries has thus reached five, all with rollback provisions, a Finance Ministry statement said today.
Four APAs out of these five have been signed in the current financial year, it added.
The APAs are with Japanese trading companies (Sogo Shoshas) and certainty in tax treatment for them has been a long standing demand of the Japanese industry, the statement said.
"The bilateral signing of APAs in this sector provides tax certainty up to nine years in each of these cases," it added.
The total number of APAs entered into by the CBDT has reached 141, the statement said, adding that it "expects more APAs to be concluded and signed before the end of the current fiscal".
The APA Scheme was introduced in the Income-tax Act in 2012. It endeavours to provide certainty to taxpayers by specifying the methods of pricing and setting them in advance for international transactions.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)