Central Board of Direct Tax (CBDT) has issued latest guidance dated 10th June, 2022 on Mutual Agreement Procedure (MAP). It has been issued by its Foreign tax research division and the guidance is to be read as an update to the earlier issued guidance of August, 2020.
In this new guidance, CBDT has endeavored to address certain queries that were raised by the stakeholders. It deals with two main aspects i.e. on the interplay between MAP and Vivad se Vishwas scheme (VSV) and secondly on the Applicant’s responsibility on making true and complete disclosure.
On the first aspect dealing with interplay between MAP and VSV scheme, the CBDT provides that where a resident tax payer had opted for the afore VSV scheme for resolution of transfer pricing adjustments with Associated Enterprises (AE) and the same had been accepted by the Indian tax authorities, the Competent Authority (CA) of other jurisdiction where the afore mentioned AE is located and such AE has filed MAP over there, the CA of such other tax jurisdiction may notify India tax authorities while allowing access to MAP to such AE but shall not deviate from the result as stands arrived under the VSV scheme. Further, it also provides that where a non-resident tax payer has itself opted for VsV, the access to MAP to such non-resident tax payer will not be available.
Further, on the second aspect of making true and complete disclosure, the CBDT has urged the taxpayers to be prompt in disclosing material changes in the information or documentation as had been submitted while applying for MAP. Providing accessibility to all documents in good faith will assist in smooth and efficient operations of MAP process.
The above changes will be made as an update to the August, 2020 guidance of MAP and will be available to all stake holder accordingly.
