CBDT Creates Environment Of Tax Certainty And Encourages MNCs To Do Business In India By Resolving More Than 100 Cases Of Transfer Pricing Disputes With USA Under MAP

The CBDT has issued a press release dated 28.01.2016 stating that one of the significant steps taken by Central Board of Direct Taxes to boost investment sentiments among MNCs is the landmark Framework Agreement signed with the Revenue Authorities of USA in January, 2015. This agreement was finalised under the Mutual Agreement Procedure (MAP) provision contained in the India-USA Double Taxation Avoidance Convention (DTAC). The agreement seeks to resolve about 200 past transfer pricing disputes between the two countries in the Information Technology (Software Development) Services [ITS] and Information Technology enabled Services [ITeS] segments. More than 100 cases have already been resolved and some more are expected to be resolved before the end of this fiscal. It is stated that the MAP programmes with other countries like Japan and UK are also progressing well with regular meetings and resolution of past disputes. The CBDT is confident that a combination of a robust APA programme and a streamlined MAP programme would be helpful in creating an environment of tax certainty and encourage MNCs to do business in India.


Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

PRESS RELEASE

New Delhi, 28th January, 2016

Sub: Resolution of more than 100 cases of transfer pricing disputes with USA under MAP-regarding

One of the significant steps taken by Central Board of Direct Taxes to boost investment sentiments among MNCs is the landmark Framework Agreement signed with the Revenue Authorities of USA in January, 2015. This agreement was finalised under the Mutual Agreement Procedure (MAP) provision contained in the India-USA Double Taxation Avoidance Convention (DTAC). The agreement seeks to resolve about 200 past transfer pricing disputes between the two countries in the Information Technology (Software Development) Services [ITS] and Information Technology enabled Services [ITeS] segments. More than 100 cases have already been resolved and some more are expected to be resolved before the end of this fiscal.

Prior to resolution of disputes under the Framework Agreement the US bilateral APA programme was closed to India. The success of the framework Agreement in short period of one year has led to the US Revenue Authorities opening up their bilateral APA programme to India. The USA is expected to begin accepting bilateral APA applications shortly.

The MAP programmes with other countries like Japan and UK are also progressing well with regular meetings and resolution of past disputes. The CBDT is confident that a combination of a robust APA programme and a streamlined MAP programme would be helpful in creating an environment of tax certainty and encourage MNCs to do business in India.

(Shefali Shah)
Pr. Commissioner of Income Tax (OSD)
Official Spokesperson, CBDT


2 comments on “CBDT Creates Environment Of Tax Certainty And Encourages MNCs To Do Business In India By Resolving More Than 100 Cases Of Transfer Pricing Disputes With USA Under MAP
  1. manish parekh says:

    Can they bring about “EASE OF BUSINESS” for the small business people who are true ambassadors of business community in India ? India is known for the entrepreneurial quality of small business communities. Remove the harassment they face at each & every stage by the government officers bestowed with such powers which help them either “extort” or harass – it is killing the enthusiasm and leading them to opt for jobs rather than starting something new

    • Rajesh Bhardwaj says:

      I agree with you sir. CBDT while making life easy or MNCs should also strive to make ease of doing business for small businessmen and taxpayer comfortable by reducing compliance cost and making rectification of mistakes, credit of taxes paid easy. I quote from TOI:-“Restore reputation of the country’s tax system for predictability,stability and simplicity marked by an Office of Tax Simplification .

      Our tax system should go the ASEAN way.Singapore the biggest ASEAN success has a top I.T. Rate of 20% ( including dividend ) and corporate tax rate of 17 %. it has no WT,inheritance or CG. In most other ASEAN countries there is no WT or inheritance tax. Both peak IT and CT rate are around 25% or less. Tax rates on CG vary from 0 to 25 %.- swaminathan s ankalesria aiyer in TOI dt 24-2-13.”

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