IRS announces APMA will accept bilateral APAs with India

APMA will accept bilateral APAs with India

The IRS today announced that on February 16, 2016, the Advance Pricing and Mutual Agreement office (APMA) will begin accepting requests for bilateral advance pricing agreements (bilateral APAs) between the United States and India. This mid-February date is intended to allow taxpayers sufficient time to file their APA requests before the start of the new Indian fiscal year (April 1).

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Today’s IRS release—IR 2016-13 [PDF 23 KB]—represents an important step in strengthening ties between the two governments in the taxation of multinationals. Bilateral APAs provide greater predictability in taxation, easing the uncertainty of doing business in each country.

Background

In January 2015, the U.S. and Indian competent authorities jointly announced that they had reached agreement on a framework for resolving longstanding competent authority cases involving Indian-resident affiliates performing information technology-enabled services or software development services. In light of this agreement, APMA began accepting requests in March 2015 for pre-filing conferences (PFCs) for bilateral APAs between the United States and India.

The U.S. and Indian competent authorities are reported to have resolved recently as many as 100 mutual agreement procedure cases and more are expected to be settled early this year. As a result of the competent authorities’ progress in concluding cases since that time, the U.S. competent authority and the Indian competent authority are now ready to accept requests for bilateral APAs covering information technology-enabled services, software development services, or other issues for whose resolution transfer pricing principles are relevant.

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