Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: TDS :: articles on VAT and GST in India :: VAT RATES :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: form 3cd :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: due date for vat payment
Transfer Pricing »
 US, Mexico agree to transfer pricing framework for maquiladoras
 Indian tax official sees expanded role for BEPS inclusive framework, addresses transfer pricing local file
  Transfer Pricing analysis of professional services provided by related-party individuals and corporations
 Transfer Pricing analysis of professional services provided by related-party individuals and corporations
 FinMin to issue rules for norms under BEPS
  CBDT signs five unilateral advance pricing agreements
 UN tax committee to consider major updates to transfer pricing manual, model tax treaty
 CRA intensifies scrutiny of complex transfer pricing tax avoidance scheme
 New transfer pricing requirements in Poland
 Additional Tax Assessment Following Transfer Pricing Control Audit
 Aligning customs with transfer pricing operations

Time to tweak transfer pricing norms
July, 30th 2014

The Union Budget to be presented by the new government would be in the midst of the most challenging times facing the country. Tax revenues are not keeping pace with the targets and taxpayers are facing the wrath of an aggressive tax administration bent upon maximising revenue collections through means fair and foul to meet the elusive targets. In this backdrop, many MNCs are facing huge transfer pricing (TP) litigation on the controversial issues such as infusion of capital, marketing intangibles, intra-group financial transactions, guarantee fees, etc. It is crucial to have some concrete guidance and clarity with regards to benchmarking these transactions. To add to this, the introduction of domestic TP regime has lead to manifold increase in taxpayers’ woes.

In addition to certain perennial issues like acceptability of multiple-year data, prohibition on the use of secret comparables, guidance on carrying out comparability adjustments (working capital/risk adjustment, etc.), increasing threshold for maintaining mandatory documentation where tax reforms are required, many changes to the domestic TP regime are also needed. Primarily, the domestic TP regime should be applicable only where there is a possibility of tax arbitrage.

Domestic TP need not be applicable to directors’ remuneration, and if it is made applicable, clear guidance should be provided for benchmarking such remuneration. Benchmarking a transaction involving payment made to a director by a company poses numerous challenges since payments vary largely across companies and depend on several subjective factors like role, functions, qualification and experience, technical ability and the extent of ownership of the said director, business needs of the company, market scenario, etc. Further, a clarification that only revenue expenditure shall be covered within the ambit of domestic TP is required.

Another issue that needs to be addressed is the allocation of costs of shared services amongst different units of the same taxpaying entity and amongst different entities of the same group.

Safe Harbour Rules (SHR) were introduced in September 2013, after extensive consultations with stakeholders, in order to reduce TP litigation and to give some comfort to the MNCs. The primary objective of Safe Harbour Rules was to ease out the compliance burden of taxpayers, curtail disputes and reduce administrative hassles for taxman. However, this scheme was not given a thumbs up by most MNCs. This is majorly due to the high threshold limits set in the SHR and also the continuing compliance requirement which does not give the required relief

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Web Application Development Web based Software Solution Web Application Deployment Web Application Solutions Web Application Software Development Web Application Deployment Web Application Programming Web Application Design and Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions