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Transfer prices refer to the prices at which one enterprise transfers physical goods, intangible property, or provides services to another enterprise with which it has a direct or indirect involvement in management, control, or capital, or where both enterprises are under common control. This relationship defines them as “associated enterprises.”
International transfer pricing involves multiple tax jurisdictions, and any modification to the transfer price in one jurisdiction necessitates a corresponding adjustment in another jurisdiction. Failure to make such a corresponding adjustment will lead to double taxation.
To counteract tax avoidance, the Arm’s Length Principle (ALP) is universally employed to replace the transfer prices set by multinational corporations for intergroup transactions involving goods or services. Typically, the arm’s length price denotes the amount an independent enterprise would pay under similar conditions.
Transfer Pricing Applicability as per Income tax Act.
The Transfer Pricing Regulations apply to all entities involved in international or specified domestic transactions, as stipulated under Rule 10D of the Income-tax Rules, 1962.
Documentation becomes compulsory under the following conditions:
- When the aggregate value of international transactions exceeds INR 1 crore.
- When the specified domestic transactions exceed the aggregate value of INR 20 crore.
These documents are essential to complying with transfer pricing regulations and mitigating tax evasion risks by ensuring that inter-party transactions are conducted at arm’s length prices (ALP).
Transfer Pricing Compliance Services
Accountant’s Report (Form 3CEB)
- Transfer Pricing Certification must be issued as per Section 92E and Rule 10E.
- It is mandatory for all international transactions and specified domestic transactions exceeding INR 20 crore in the previous financial year.
- To submit Form 3CEB, the target date is 31st October of the particular assessment year.
- For firms subject to transfer pricing, the target date to file Income Tax Returns is 30th November of the particular assessment year.
- This report plays an essential role for multinational enterprises by verifying the accuracy and adherence of their transactions to the arm’s length principle.
Specialized Transfer Pricing Services
At Mercurius, we aim to provide wide-ranging transfer pricing services that guide you through the intricacies of international transactions and ensure full compliance with Indian regulatory requirements.
Documentation Assistance
- Comprehensive documentation according to the unique requirements of each client.
- In-depth functional analysis of business operations.
- Selection of appropriate transfer pricing methods aligned with the Indian legal system.
- Detailed documentation is compliant with the arm's length principle.
- Support across jurisdictions, including the preparation of master files, local files, and country-by-country reporting (CbCR).
Advisory Services
- Strategic guidance to navigate Indian regulations and transfer pricing.
- Professional consultation to select appropriate domestic transfer pricing methods.
- Optimization of compliant prices to ensure operational efficiency amongst the firms.
- Assistance in setting up operations in India or aiming to improve compliance with transfer pricing regulations.
- Aligning practical solutions with business objectives to effectively manage transfer pricing challenges.
Disputes Handling Services
- From conducting rigorous analyses to negotiating with tax authorities, the transfer pricing consultants at Mercurius offer professional services throughout the dispute resolution process.
- Ensuring robust documentation to substantiate arm's length pricing.
- Expert guidance is provided to address audit queries regarding transfer pricing rules, and compelling arguments are presented to tax authorities.
Benchmarking Services
- Establishing arm's length pricing for intercompany transactions.
- Abiding by international methodologies to ensure accuracy and reliability.
- Support for various needs, including preparing documentation, negotiating APAs, and addressing audits.
- Optimizing tax efficiencies by navigating regulatory environments to mitigate compliance risks using industry data and economic indicators to tailor transfer pricing compliance solutions.
Why Choose Mercurius for Transfer Pricing Services?
Expertise
Mercurius's tax consultants are experienced tax professionals who are well-versed in the latest tax laws and regulations. Clients can depend on us for accurate, precise, and up-to-date advice to ensure compliance and optimize their taxes.
Personalized Service
We understand that every individual’s financial requirements are unique. Our services are tailored to match your specific needs and objectives.
Proactive Approach
With tax consulting services at Mercurius, you stay a step ahead of changes in tax legislation, and we proactively advise you on how to manage your tax affairs.
Comprehensive Support
We provide a full range of personal tax services, such as filing tax returns, preparation for tax planning, and dispute resolution.
Client-Centric Focus
Your satisfaction is our priority. We are committed to providing exceptional service and building long-term relationships with our clients.
FAQs
The procedure for registration varies slightly from state to state and is somewhat dependent on whether you’re forming an L.L.C. or a C-corp. Here are some of the basic steps and requirements:
- Choose a unique name as a trademark
- Register with state agencies
- Get a registered agent
- File for foreign qualification
- File state documents and fees
- Register with local agencies
- Open a business bank account
- Right of the compliance function to openly disclose its findings and views to senior management, board/ ACB or board committee.
The procedure for registration varies slightly from state to state and is somewhat dependent on whether you’re forming an L.L.C. or a C-corp. Here are some of the basic steps and requirements:
- Choose a unique name as a trademark
- Register with state agencies
- Get a registered agent
- File for foreign qualification
- File state documents and fees
- Register with local agencies
- Open a business bank account
- Right of the compliance function to openly disclose its findings and views to senior management, board/ ACB or board committee.
The procedure for registration varies slightly from state to state and is somewhat dependent on whether you’re forming an L.L.C. or a C-corp. Here are some of the basic steps and requirements:
- Choose a unique name as a trademark
- Register with state agencies
- Get a registered agent
- File for foreign qualification
- File state documents and fees
- Register with local agencies
- Open a business bank account
- Right of the compliance function to openly disclose its findings and views to senior management, board/ ACB or board committee.
