MAP, bilateral APA case resolution with United States

18 November 2016

India’s Central Board of Direct Taxes on 17 November 2016 announced that agreements have been reached to resolve more than 100 cases under the mutual agreement procedure (MAP) between India and the United States, and that there has been an agreement reached on the terms and conditions of the first bilateral advance pricing agreement (APA) involving India and United States.

These developments are a result of a “framework agreement” signed by India and United States in January 2015—an accord intended to resolve some 200 transfer pricing disputes between India and United States in the information technology (IT) services and IT-enabled services segments.

A bilateral competent authority meeting in late October 2016 resulted in the resolution of 66 MAP cases relating to transfer pricing issues, and 42 MAP cases relating to treaty interpretation issues.

The resolved cases pertaining to transfer pricing issues concerned the nature of payments of royalties, management fees, cost contribution arrangements, engineering design services, contract research and development (R&D) services, investment advisory services, marketing support services, software development services, among others.

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