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India: “Substantive revision” of bilateral APA with UK

India: “Substantive revision” of bilateral APA with UK

The Central Board of Direct Taxes agreed to a “substantive revision” of an India-UK bilateral advance pricing agreement (APA) due to certain changes in the way a particular transaction was being conducted.


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This is reportedly the first such revision to an existing APA, with the changes resulting from what has been described as a “commercial necessity” of the taxpayer’s business, one that had evolved over the term of the APA.

The Indian APA programme allows for a revision of an APA when there is a change in facts or critical assumptions, or when there is a failure to meet a condition on which the APA was based.

KPMG observation

The Indian and UK competent authorities found it was imperative to implement the change from a broader multinational corporation group perspective. The competent authorities of both countries demonstrated a willingness to understand the business and commercial realities of the taxpayer’s business and agreed with the requirement and rationale of the change in the taxpayer’s business. The competent authorities were quick to approve of the change and consequent revision of the bilateral APA once the commercial need for such a change was understood.

The action by the Indian and UK competent authorities may be viewed as a positive development for taxpayers that may have a similar situation, but are wary of a negative outcome. A revision of an APA will be based on the facts and circumstances.


Read a July 2018 report [PDF 621 KB] prepared by the KPMG member firm in India

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