The Central Board of Direct Taxes ( CBDT ) of India announced a significant increase in Advance Pricing Agreements ( APAs ) signed with Indian taxpayers in the financial year 2023-24.
This marks a positive development for businesses seeking clarity on international tax liabilities.
Record-Breaking Year for APAs
The CBDT reported signing a record 125 APAs, representing a 31% jump compared to the previous year. APAs are agreements between a taxpayer and the tax authority that establish how transfer prices will be determined for tax purposes. Transfer prices refer to the pricing of goods and services exchanged between related parties, such as subsidiaries and parent companies.
The APAs are designed to provide certainty and predictability for businesses regarding their international tax obligations. This clarity can significantly reduce the risk of tax disputes and potentially encourage further investment.
The CBDT announcement highlights the increasing importance of the APA program in facilitating international trade and investment for Indian businesses. It’s expected that the program will continue to gain traction in the coming years, as expressed in the source release through the Press Information Bureau, Government of India .
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