What is Advance Pricing Agreement (APA)?
Nexa Consultancy | Startup & Finance Glossary
An APA is an agreement between a taxpayer and the tax authority (CBDT in India) to pre-determine the pricing methodology for international transactions with associated enterprises for a specified period. It provides certainty and avoids future transfer pricing disputes.
Startup Example: A SaaS startup with a significant volume of transactions with its US parent company enters into an APA with the CBDT. This locks in the method for calculating their service fees for the next 5 years, providing tax certainty.
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