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Bilateral Advance Pricing Agreement

Bilateral Advance Pricing Agreement Template for India

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Key Requirements PROMPT example:

Bilateral Advance Pricing Agreement

"I need a Bilateral Advance Pricing Agreement between our Indian IT services subsidiary and our US parent company, covering software development services and licensing arrangements, with a proposed effective date of January 1, 2025."

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Document background
The Bilateral Advance Pricing Agreement (BAPA) is a sophisticated tax arrangement used when multinational enterprises seek to establish certainty in their transfer pricing arrangements between Indian entities and foreign related parties. This document becomes relevant when companies engage in significant cross-border transactions and wish to avoid potential transfer pricing disputes with tax authorities. The agreement, which operates under Indian tax jurisdiction and involves foreign tax authorities, provides a framework for determining arm's length pricing for international transactions. It includes detailed specifications of transfer pricing methodologies, critical assumptions, and compliance requirements. The BAPA program in India, introduced through Section 92CC of the Income Tax Act, has become increasingly important for multinational companies operating in India, offering them a mechanism to obtain advance certainty on their transfer pricing arrangements while avoiding double taxation issues.
Suggested Sections

1. Parties: Identification of the taxpayer, Indian tax authority (CBDT), and the relevant foreign tax authority

2. Background: Context of the agreement, including description of the international transactions and business operations involved

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

4. Scope of Agreement: Detailed description of covered transactions, entities, and time period of the APA

5. Transfer Pricing Methodology: Agreed method(s) for determining arm's length pricing, including computational details and rationale

6. Critical Assumptions: Key business and economic conditions that form the basis of the agreement

7. Term of Agreement: Duration of the APA, including effective date and expiration date

8. Compliance Requirements: Annual compliance obligations, reporting requirements, and maintenance of records

9. Review and Adjustment Procedures: Processes for reviewing compliance and making necessary adjustments

10. Governing Law and Jurisdiction: Applicable laws and jurisdiction for interpreting and enforcing the agreement

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

12. Amendment and Termination: Conditions and procedures for modifying or terminating the agreement

Optional Sections

1. Rollback Provisions: Section addressing the application of the APA to previous years, used when rollback is requested and approved

2. Dispute Resolution: Specific procedures for resolving disputes, included when standard MAP provisions need modification

3. Force Majeure: Provisions for handling unforeseen circumstances, included for agreements with significant operational dependencies

4. Language: Specification of controlling language version, included when agreement is executed in multiple languages

5. Group Relief: Provisions related to group taxation aspects, included when relevant for multinational group structures

6. Customs Valuation Alignment: Provisions aligning transfer pricing with customs valuation, included when there are significant import/export transactions

Suggested Schedules

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

2. Schedule B - Transfer Pricing Computations: Detailed methodology, formulas, and examples of transfer pricing calculations

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

4. Schedule D - Annual Compliance Report Format: Template and instructions for annual compliance reporting

5. Schedule E - Related Party Details: Information about all related parties involved in covered transactions

6. Appendix 1 - Supporting Documentation: List of all supporting documents referenced in the agreement

7. Appendix 2 - Economic Analysis: Detailed economic analysis supporting the transfer pricing methodology

8. Appendix 3 - Functional Analysis: Detailed analysis of functions, assets, and risks of involved entities

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Arm's Length Price
APA Term
Applicable Laws
Associated Enterprise
Annual Compliance Report
Advance Pricing Agreement
Bilateral APA
Competent Authority
Covered Transaction(s)
Critical Assumptions
Controlled Transaction
Comparable Uncontrolled Price
Effective Date
Financial Year
Foreign Associated Enterprise
Group
International Transaction
Indian GAAP
IFRS
MAP Article
Operating Margin
Parties
Related Party
Rollback Period
Rollback Year
Specified Domestic Transaction
Transfer Pricing Method
Tested Party
Testing Period
Tax Year
Transfer Pricing Documentation
Transactional Net Margin Method
Uncontrolled Transaction
Working Days
Clauses
Definitions
Interpretation
Scope
Term and Duration
Transfer Pricing Methodology
Critical Assumptions
Documentation Requirements
Compliance Obligations
Confidentiality
Representations and Warranties
Record Keeping
Review and Monitoring
Breach and Remedies
Renewal
Amendment
Termination
Force Majeure
Dispute Resolution
Governing Law
Notices
Assignment
Entire Agreement
Severability
Waiver
Costs and Expenses
Language
Counterparts
Annual Compliance Review
Information Exchange
Mutual Agreement Procedure
Rollback Provisions
Tax Authority Powers
Reporting Requirements
Revision and Modification
Relevant Industries

Manufacturing

Information Technology

Pharmaceutical

Automotive

Consumer Goods

Financial Services

Telecommunications

E-commerce

Research and Development

Professional Services

Relevant Teams

Finance

Tax

Legal

Treasury

International Operations

Corporate Planning

Compliance

Risk Management

Transfer Pricing

Corporate Development

Relevant Roles

Chief Financial Officer

Tax Director

Transfer Pricing Manager

International Tax Manager

Corporate Controller

Finance Director

Tax Compliance Manager

Head of Global Tax

Treasury Manager

Finance Planning Manager

Legal Counsel

Tax Partner (External Advisory)

Corporate Finance Manager

Industries
Income Tax Act, 1961 - Section 92CC: Primary legislation enabling Advance Pricing Agreements in India, providing the legal framework for entering into APAs with the Central Board of Direct Taxes
Income Tax Act, 1961 - Section 92C: Defines computation of arm's length price and various transfer pricing methods accepted in India
Rule 10F to 10T of Income Tax Rules, 1962: Detailed procedural rules for APA applications, including filing, fee structure, and terms and conditions
DTAA between India and Relevant Country: The applicable Double Taxation Avoidance Agreement with the other country involved in the bilateral APA, which provides the framework for resolving international tax matters
OECD Transfer Pricing Guidelines: International guidelines that provide transfer pricing methods and principles, which are generally considered by Indian tax authorities
Circular No. 10/2015 dated 10th June 2015: CBDT circular providing guidance on rollback provisions in Advance Pricing Agreements
The Mutual Agreement Procedure (MAP) Guidelines: Guidelines for resolving disputes between tax authorities of different countries in bilateral APAs
APA Guidance by CBDT: Various circulars and notifications issued by Central Board of Direct Taxes providing guidance on APA procedures and requirements
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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