Dispute Resolution


The Indian APA authorities have been refusing to accept applications for bilateral APAs from countries like Germany, France, Singapore and Italy as the Double Taxation Avoidance Convention (DTAC) of India with these countries do not contain Article 9(2) which provides for corresponding adjustment to be allowed to the taxpayer for any economic double taxation that arises on account of transfer pricing adjustments. The OECD has in its commentary given two options if such an issue arises:

The Article 25 on Mutual Agreement Procedures in various DTACs covers such instances of allowing a corresponding adjustment for TP, hence bilateral APAs should be allowed, or the countries (like India) that do not agree that Article 25 of DTACs cover corresponding TP adjustments, should make unilateral changes in their regulations to allow such adjustment.


India may introduce a clarification, giving effect to the point 2 above, to enable taxpayers from the countries like Germany, France, Singapore and Italy to file for bilateral APAs.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)
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