The Indian advance pricing agreement (APA) authorities concluded an APA wherein the price determined by the Special Valuation Branch of the Indian Customs authorities was accepted as the arm’s length price for certain imports.
Traditionally, transfer pricing and customs valuation functions seek to evaluate an inter-company transaction from different (opposite) perspectives. Both aim to arrive at an arm's length price. Transfer pricing authorities seek to prevent any excessive price for imports. However, customs authorities see to prevent any under-pricing for imports. The two methods differ, and taxpayers often find it difficult to adopt an approach that demonstrates their inter-company pricing to be at arm's length from both transfer pricing and customs valuation perspectives.
In a recent case, the authorities adopted in an APA the customs valuation for transfer pricing purposes.
Tax professionals look to this case as positive reinforcement of the potential value of APAs in India.
Read a March 2018 report [PDF 642 KB] prepared by the KPMG member firm in India
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.