On 19.12.2014, Central Board of Direct Taxes has signed a bilateral Advance Pricing Agreement (APA) with a Japanese Company. This is India's first bilateral APA. The APA is for a period of five years. The APA has been finalized in a period of about one and a half years, which is shorter than time normally taken in finalizing APAs internationally.

The APA scheme has been introduced to bring about certainty and uniformity in transfer pricing matters of multi - national companies and reducing litigation. APAs will improve investment climate in the country. In the context of growing economic ties between Japan and India, especially after Hon'ble Prime Minister's visit to Japan, this APA is expected to generate positive sentiments among Japanese investors in India.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.