Update on Discussions on Improving the India-USA Tax Relationship
November 2013At a luncheon sponsored by Bloomberg BNA in Washington, DC on November 22, 2013, which the author attended, Mr. Mike Danilack, the Deputy Commissioner (International) of the IRS and the US competent authority, discussed his meeting with his counterpart in India, Mr. Akhilesh Ranjan, earlier this year. He described their meeting as “productive and open” and said it addressed both procedural and substantive issues. He said there was “good engagement” and a willingness to work together to resolve issues. The meeting has set in play a process to get the two sides together to work through issues that have stalled the mutual agreement process.
Danilack described the current process with India as working through issues in the abstract in order to arrive at a set of common principles. He added that the principles need not be OECD or UN Model Treaty principles. To the author, this indicated flexibility on the part of the United States. If successful, then the two countries should get back to resolving MAP cases.
With respect to bilateral APAs with India Danilack said that he was “not anxious” to work on those given the backup in the current MAP caseload. He also was asked to comment on US companies seeking unilateral APAs in India and US companies who have adopted the newly released Indian transfer pricing safe harbors. With respect to unilateral APAs, Danilack said an issue a US taxpayer must address is whether all remedies have been exhausted to report the correct amount of income and tax in India. With respect to the Indian transfer pricing safe harbors, he refused to comment on whether the US taxpayer meeting the safe harbor would have to book a FIN 48 (accounting for uncertain tax positions) reserve of US tax for US GAAP purposes.
Danilack also discussed a recent “MAP Forum” attended by a number of countries. He described the forum as addressing issues of “posture.” Some countries have a “negotiate to win” posture he said as opposed to negotiating to reach an agreement. Danilack said country teams needed training on “soft skills” to learn how to get to an agreement. He did not say which countries attended the forum or which countries had a “negotiate to win” posture.
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