Rising Transfer Pricing Disputes - Will Advance Pricing Agreements bring relief?

Transfer Pricing (TP) is an issue India Inc cannot ignore. According to experts, greater scrutiny by tax authorities over the years leading to increased adjustment orders, has resulted in numerous litigations. In a move aimed at providing certainty to taxpayers on the pricing mechanism as well as the tax liabilities thereof, the finance minister has now proposed to launch the Advance Pricing Agreements (APAs) with effect from July 1, 2012. Even as industry awaits the notification that would crystallise the structure of the mechanism, experts see the following as elements key to the success of APAs.