MNCs approach tax dept, seek revision of agreements due to Covid-19

The Covid-19-led economic disruption may lead to reopening of several specific tax agreements that multinational companies (MNCs) have with Indian tax authorities.

These companies are reaching out to the direct tax board to seek clarity on revising the advance pricing agreements (APAs) with critical assumptions and preset margins having become irrelevant on account of factors like relocation of persons, supply-chain disruption, abnormal expenses, change in asset deployment, risk assumed, etc.

Tax authorities are of the view that while all agreements may not be affected since APAs are long-term in nature, the government will consider if companies have documented the specific changes.

The industry