Types Of Advance Pricing Agreements
The purpose of the draft law is to optimize the procedure for concluding agreements on increased prices (hereinafter referred to as « APAs »), to define the conditions under which transactions can be considered controlled and to make other specific amendments to the provisions of the Russian Tax Code. An advance pricing agreement (APA) is a prior agreement between a taxable person and a tax department on an appropriate transfer pricing method (TPM) for a number of transactions that are being negotiated over a given period (so-called « hedged » transactions). Bilateral and multilateral AAAs are generally bilateral or multilateral, i.e. they also include agreements between the taxable person and one or more foreign tax administrations under the supervision of the cartel procedure (POPs) established in income tax treaties.  The taxable person benefits from such agreements, as it is certain that the income related to the covered transactions is not subject to double taxation by the IRS and the competent foreign tax authorities. Irs policy is to « encourage » taxpayers to seek bilateral or multilateral APAs where there are provisions of the relevant authorities. In its Transfer Pricing Guidelines, the Organisation for Economic Co-operation and Development (OECD) defines the following terms: it is an agreement between the Board of Directors and the applicant, which follows an agreement between the competent authority of India and the competent authority of the other country on the most appropriate transfer pricing method or market comparison price, in accordance with Rule 44GA. This article discusses the provisions of Advance Pricing Agreements (APA). It will mainly cover the fundamental importance of the Advance Pricing Agreement, the types of Advance Pricing Agreement, the objectives of the Advance Pricing Agreement and the number of Advance Pricing Agreements signed by India.
« An agreement that, prior to the controlled transactions, sets an appropriate set of criteria for the transfer pricing of those transactions over a given period. » Under Indian tax law, this is an agreement between the Central Board of Direct Taxes (CBDT) and any person who sets the subcontracting price in advance or determines how the subcontracting price (or both) is determined in respect of an international transaction. . . .