1.  Why APA?  Types of APA  Statutory Provisions  The APA Scheme  Administration of APA

2.  Commitment towards reduction of litigation  An international best practice  Demand from the clients

3.  APAs could be Unilateral, Bilateral or Multilateral  Cross-country experience reveals that generally taxpayers go for bilateral APAs as they avoid double taxation.  Unilateral APA is useful when there is no taxation in the other country.  Multilateral APA takes a very long time for negotiation.

4.  APA will determine either the Arms’ Length Price or the manner of determining the ALP.  Canada has a list of ineligible persons, which includes trusts and companies operating from tax havens.  UK allows APA to any UK business.  Japan allows APA for any legal entity.  Indian APA scheme will apply to all persons.

5.  Unlike Canada and Japan, India has introduced specific legislative provisions in section 92CC and 92CD for APA. Power has been given by the Parliament to CBDT to enact an APA scheme for its administration.  UK also has specific legislation for administration of APA.

6.  The Statute allows an APA for a maximum period of 5 years but does not prescribe any minimum period.  Canada, UK and Japan have APAs for 3 to 5 years.  The agreement would be binding on both parties.

7.  In Japan it is Advance Pricing Arrangement, hence there is no agreement between tax department and the taxpayer. In UK and Canada there is an agreement.  In India there would be an agreement and the Board has to sign the agreement with the taxpayer.

8.  The Board may declare an APA to be void ab initio if the same is found to have been entered into on the basis of fraud and misrepresentation of facts.  Once an APA is declared as void ab initio, the normal provisions of the Income-tax Act shall apply to the assessee.

9.  The CBDT has to notify the APA Scheme in exercise of the powers contained in Section 92CC of the Income-tax Act;  The Scheme would govern the APA regime in India;  International experience and best practices would be suitably incorporated in it.

10.  APA is to be entered by the Board with the applicant after obtaining the approval of the Central Government.  In other jurisdictions, Competent Authority administers the bilateral/multilateral APAs whereas, Unilateral APA is administered by another team.  A similar arrangement is being contemplated in India.

11.  Japan and UK do not charge any fee.  Canada charges out of pocket expenses.  There is a proposal in India to charge an APA fee.

12.  Pre-filing Consultation: India is likely to have provision for pre-filing consultation like other countries to determine suitability of APA.  The modalities for filing of pre-filing consultation application would be spelt out in the notification.

13.  After pre-filing consultation, the applicant would be required to file an application within a particular time. This is same as in UK and Japan.  In UK, the CA has the power to accept application beyond this period.

14.  Japan, Canada and UK all rely on site visits (even joint visits for bilateral/multilateral APA) in order to find facts and prepare position paper. India would have similar provisions.  The APA teams have to ascertain the true facts and may call for any documents from the applicant. For bilateral/ multilateral APA, representative of CA to be involved.

15.  Canada does not allow it for unilateral APA but allows it for bilateral APA.  Japan allows roll back.  There may not be any provision for roll back in India as it is felt that previous cases can be resolved under MAP.

16.  Renewal of APA in India is likely to be taken as a fresh application.  Pre-filing consultation may not be necessary for new APA.

17.  There would be a two-tiered structure to administer the different types of APAs.  Bilateral/Multilateral APA would be administered by the CA and his team.  Unilateral APA would be administered by the DGIT (International Taxation) and her APA teams.  A Commissioner of Income-tax would head the Unilateral APA teams and has already been posted.

18.  Addl. Commissioners and Deputy Commissioners have already been posted at Delhi, Mumbai and Bengaluru.  There is a proposal to hire experts in the field of Economics, Statistics and Law to be part of the APA teams.