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The tax department of the United States of America on Tuesday announced that it will begin accepting requests for bilateral advance pricing agreements (APAs) with India from February 16, which is a way to settle transfer pricing disputes.
The announcement by the US Internal Revenue Service (IRS) came in from Washington.
"We appreciate the efforts of the Indian Competent Authority and his team, as well as the IRS team, for working to reach common understandings and procedures for resolving differences fairly," said IRS Commissioner John Koskinen. "Multi-national firms operating in both the US and India are the beneficiaries of this effort."
An official statement from the US said this announcement represents an important step forward in strengthening ties between the two governments in the taxation of multinationals. Bilateral APAs provide greater predictability in taxation, easing the uncertainty of doing business in each country.
SP Singh, senior director, Deloitte India, said, ?"Taxpayers, who have filed APAs in respect of transactions with US-based group entities, have been waiting for bilateral APAs between India and US. Bilateral APAs provide greater certainty by removing double taxation, either totally or significantly. Many taxpayers filed unilateral APAs with option to convert into bilateral APAs."
The statement from US came at a time when both countries have solved over 100 transfer pricing disputes over the past year with US companies engaged in sectors such as information technology services and information technology-enabled service segments. More cases are expected to be solved by th end of this financial year.
