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The Central Board of Direct Taxes (‘CBDT’), vide press release dated April 16, 2024, has announced its achievement of signing a record APAs during the fiscal year 2023-24.

As per the press release, 125 APAs have been signed during FY 2023-24. The statistics of APAs signed (Unilateral as well as Bilateral) during FY 2023-24 vis-à-vis APAs signed during the previous FY, i.e., FY 2022-23, are provided in the tabular format as below:

As per the press release, the Bilateral APAs signed this year have also marked a record, showcasing India’s strengthening cooperation with global tax treaty partners, particularly Australia, Canada, Denmark, Japan, Singapore, the UK, and the USA.

Additionally, taxpayers are given the opportunity to apply the terms of the APA retroactively to the four preceding years, providing up to nine years of tax certainty.

KNAV Comments:

The CBDT’s continued and incremental commitment to this program highlights its role in fostering a conducive business environment, promoting transparency, and enhancing taxpayer confidence through collaborative approaches. This approach has been pivotal in making the APA scheme a cornerstone of India’s tax/transfer pricing framework for multinational corporations, emphasizing its role in aligning with global best practices in tax administration.

Further, the accomplishments of FY 2023-24 extends the positive impact of the APA program on India’s ease of doing business landscape, particularly benefiting entities involved in intricate international transactions. The initiative will not only help prevent disputes over transfer pricing but also ensure consistency and reliability in tax obligations across borders. Through APA, the taxpayer will achieve certainty over a period of 9 years (including the rollback period).

The increasing trend of bilateral APAs shows taxpayers’ perception of security and safeguarding themselves against potential or actual instances of double taxation in different jurisdictions.