The Central Board of Direct Taxes has resolved disputes totalling Rs 5,000 crore in 180 cases with foreign companies under the Mutual Agreement Procedure (MAP) since April 1, 2014, the finance ministry said in a statement on Tuesday.
“The total amount of income locked up in dispute in these cases is approximately Rs 5,000 crore. The resolved cases pertain to various sectors of the economy like software services, IT enabled services, manufacturing and consultancy services, etc,” the ministry said.
The countries with which cases have been resolved are the US, Japan, United Kingdom and China. MAP, under the double taxation avoidance agreement (DTAA), is an alternative tax dispute resolution mechanism available to authorities and foreign investors.
“Its (MAP) use to resolve disputes has provided comfort to foreign investors and also reduced the number of cases under litigation. This is one of the actions taken by CBDT to ensure a fair and judicious dispute resolution regime to encourage foreign investment,” the finance ministry said.
Tax treaties signed by India with various countries contain an article to relieve taxpayers from double taxation through an MAP. Internationally, the MAP is an important mechanism to resolve tax disputes between countries.
“In the last two years, increased focus on MAP has resulted in resolution of large number of disputes relating to double taxation,” the finance ministry said.