Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 27th November, 2017.
Clarification of India’s position on the acceptance of MAP and bilateral APA in
cases of countries where Article 9(2) of OECD Model Tax Commentary is
A number of references have been received from time to time regarding the acceptance of applications pertaining to Transfer Pricing MAP cases and bilateral Advance Pricing Agreements (APAs) where the Associated Enterprise (AE) of the Indian entity is resident of a country with which India has entered into a Double Taxation Avoidance Agreement (DTAA) but the Agreement does not contain Paragraph 2 of Article 9 (or its relevant equivalent Article) relating to ‘Corresponding Adjustment’.
The matter has been examined by the Central Board of Direct Taxes (CBDT) and it has been decided to accept Transfer Pricing MAP and bilateral APA applications regardless of the presence or otherwise of Paragraph 2 of Article 9 (or its relevant equivalent Article) in the DTAAs.
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT
Fatema Hunaid, Partner, Grant Thornton India LLP on CBDT’s clarification on India’s position on acceptance of MAP and bilateral APAs with respect to transfer pricing cases said that “The revised stand of the Indian government comes as a welcome change for the multinational companies (“MNCs”) operating in India. MNCs faced with TP related double taxation issues can now approach the Competent Authority(s) for initiating bilateral negotiations in order to arrive at mutually acceptable TP positions. The change will be particularly relevant for TP cases involving countries like Germany, France, etc., where earlier a bilateral APA/ MAP was not possible due to the absence of Article 9(2) or equivalent in the relevant DTAA.”