Transfer Pricing - APA
- An Advance Pricing Agreement (APA) is a pact between a taxpayer and a tax authority on pricing of future inter-company transactions.
- APA provides certainty on pricing and the methodology for inter-company transactions and also eliminates double taxation risks
- The parties to an APA agree on the transfer pricing methodology to be applied to such transactions for a future period of time
- In India, besides unilateral APA between the tax authority and a taxpayer, bilateral and multilateral APAs involving the tax authorities of other countries are also permitted