Advance Pricing Agreement (APA), Mutual Agreement Procedure (MAP) & Safe Harbours

In recent years there has been a significant increase in transfer pricing litigation resulting in numerous audits/assessments and disputes with revenue authorities around the world. Transfer pricing litigations can be challenging for organisations as it demands utilising appropriate resources and investment of huge time.

In view of the same, there are various dispute resolution mechanisms which can be considered by the taxpayers, like APA, MAP and Safe Harbour rules that significantly reduce the litigation and provide clarity and certainty on the tax matters. To elaborate:

• APA is an agreement between the taxpayer and tax authorities to adopt the most appropriate TP methodology for determining the arm’s length price for the covered international transaction. APA can be unilateral/bilateral/multilateral.
• MAP is a dispute resolution procedure which enables the taxpayer to achieve certainty and clarity on issues of economic or juridical double taxation.
• Safe Harbour provisions were introduced to reduce litigation wherein the taxpayer declares the transfer price as per the provisions and subject to certain conditions.

Our team is experienced in handling and resolving litigation at various levels of the appellate authorities. The team also has the required technical skill and knowledge to navigate businesses through the entire process of dispute resolution. Our clients leverage on our experience in –

• Dealing with the revenue authorities for APA, MAP and Safe harbour process
• Evaluating the business risks and exposure on critical issues and suggesting the most viable solution for dispute resolution
• Developing strategies and policies that can defend the business against future audits and assessments
• Conducting feasibility analysis, economic analysis, filing application and response to queries, handling negotiation process with appropriate authorities (primarily relating to APA and MAP)