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Advance Price Agreement

Advance Price Agreement Template for India

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Key Requirements PROMPT example:

Advance Price Agreement

"Need an Advance Price Agreement for our IT services company covering software development services provided to our UK subsidiary, using the cost plus method, with a rollback provision and a five-year term starting January 2025."

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Document background
An Advance Price Agreement (APA) is a crucial document for multinational enterprises operating in India who seek to establish certainty in their transfer pricing arrangements. It is particularly relevant when companies have significant international transactions with related parties and want to avoid potential transfer pricing disputes with tax authorities. The agreement is authorized under Section 92CC of the Income Tax Act, 1961, and is administered by the Central Board of Direct Taxes (CBDT). It can be unilateral (involving only Indian tax authorities), bilateral (involving one other country), or multilateral (involving multiple countries). The document typically includes detailed transfer pricing methodologies, critical assumptions, compliance requirements, and specific terms and conditions that will govern the pricing of international transactions for a specified future period. Companies usually pursue an APA when they have complex international transactions, want to avoid double taxation, or seek to minimize transfer pricing litigation risks.
Suggested Sections

1. Parties: Identification of the taxpayer and the tax authority (CBDT) entering into the agreement

2. Background: Context of the agreement, including brief description of the taxpayer's business and reason for seeking an APA

3. Definitions: Definitions of key terms used in the agreement, including technical transfer pricing terminology

4. Scope of Agreement: Specific international transactions covered by the APA, including details of associated enterprises

5. Term of Agreement: Duration of the APA, including start and end dates

6. Transfer Pricing Methodology: Detailed description of the agreed transfer pricing method(s) and how they will be applied

7. Critical Assumptions: Fundamental assumptions underlying the APA that, if breached, may lead to revision or cancellation

8. Annual Compliance Report: Requirements and procedures for annual compliance reporting

9. Record Keeping: Specific requirements for maintaining documentation and records

10. Revision and Cancellation: Circumstances and procedures for revision or cancellation of the APA

11. Confidentiality: Provisions regarding the confidentiality of information shared under the APA

12. Dispute Resolution: Procedures for resolving disputes arising from the interpretation or application of the APA

13. Governing Law: Specification of Indian law as the governing law and relevant jurisdictional provisions

Optional Sections

1. Rollback Provisions: Optional section for applying the APA methodology to previous years, used when rollback is requested and applicable

2. Multiple Jurisdiction Provisions: Required when the APA involves multiple tax jurisdictions (bilateral or multilateral APAs)

3. Compensating Adjustments: Included when specific provisions for making transfer pricing adjustments are needed

4. Force Majeure: Optional provisions for handling extraordinary circumstances that may affect the application of the APA

5. Language: Required for bilateral/multilateral APAs to specify the controlling language version

6. Site Visits: Optional section specifying terms for tax authority site visits, if applicable

7. Renewal Provisions: Optional section detailing the process for APA renewal, if contemplated

Suggested Schedules

1. Schedule A - Covered Transactions: Detailed list and description of all international transactions covered by the APA

2. Schedule B - Transfer Pricing Methodology Details: Detailed technical explanation of the approved transfer pricing methodology, including calculations and examples

3. Schedule C - Critical Assumptions Details: Comprehensive list and explanation of all critical assumptions

4. Schedule D - Compliance Report Template: Template and instructions for the required annual compliance report

5. Appendix 1 - Financial Projections: Financial projections and assumptions used in the APA analysis

6. Appendix 2 - Functional Analysis: Detailed functional analysis of the parties involved in the covered transactions

7. Appendix 3 - Supporting Documentation: List of all supporting documentation referenced in the APA

8. Appendix 4 - Organizational Structure: Detailed organizational structure showing relationships between associated enterprises

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions



































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Relevant Industries

Manufacturing

Information Technology

Pharmaceutical

Automotive

Consumer Goods

Financial Services

Telecommunications

Energy and Utilities

E-commerce

Professional Services

Chemical Industry

Electronics Manufacturing

Software Development

Research and Development

Relevant Teams

Finance

Tax

Legal

Compliance

Treasury

International Tax

Transfer Pricing

Corporate Planning

Risk Management

Global Operations

Relevant Roles

Chief Financial Officer

Tax Director

Transfer Pricing Manager

International Tax Manager

Corporate Controller

Finance Director

Tax Compliance Manager

Treasury Manager

Financial Planning Analyst

Legal Counsel

Compliance Officer

Head of International Tax

Director of Global Tax

Senior Tax Analyst

Transfer Pricing Specialist

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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