As an active participant in the OECD’s base erosion and profit shifting (BEPS) project, India has implemented nearly all the BEPS recommendations and has taken several steps to amend the country’s domestic tax laws appropriately. The Indian Finance Act, 2016 implemented BEPS Action Item 13 by introducing a three-tiered transfer pricing documentation structure and made it effective from the 2016-17 financial year.
The Indian tax authority has published for public comments a draft Notification, which will implement the OECD’s proposals under Action 5 of the base erosion and profit shifting (BEPS) project.
The Indian Government has approved the country’s tax treaty with Iran.
The tax treaty is in line with the ones entered into by India with other countries. The proposed treaty also meets tax treaty-related minimum standards proposed under the OECD’s base erosion and profit shifting project, in which India is participating on an equal footing.
India’s Central Board of Direct Taxes (CBDT) entered into a further seven unilateral advance pricing agreements (APAs) in February 2018, taking the total number of APAs signed to 203.
On February 19, 2018, India gazetted a revised tax treaty with Kenya. The revised treaty was signed by both countries in July 2016.
India on February 17 signed a tax treaty with Iran. The treaty is similar to the ones entered into by India with other countries.
By Alex Cooper
On February 7, 2018, the Indian Government approved the signing and ratification of a protocol to amend the country’s tax treaty with China.
On February 7, 2018, the Indian tax authority announced that it entered into two bilateral advance pricing agreements (APAs) in the month of January 2018.
On February 1, 2018, India’s Finance Minister, Arun Jaitley, issued the country’s 2018 Budget, which introduces a new permanent establishment (PE) nexus based on virtual economic presence to tax business profits of foreign enterprises.
The Indian Government has, in recent past, taken bold and practical measures to align the Indian transfer pricing regulations with global best practices by introducing country-by-country reporting and “master” file regulations; interest limitation provisions; revising the rates under the safe harbor rules; rationalizing specified domestic transactions; and introduction of range concept and use of multiple-year data. Additionally, the Government has made several attempts on the administrative side to reduce litigation and introduce a taxpayer-friendly regime. Having said that, there are certain ambiguities that need to be resolved.
In the 2018 Budget, which is due to be presented on February 1, 2018, we hope to see appropriate steps being taken to address these ambiguities, some of which are listed below.