Transfer pricing happens whenever two companies that are part of the same multinational group trade with each other: when a US-based subsidiary of Coca-Cola, for example, buys something from a French-based subsidiary of Coca-Cola. When the parties establish a price for the transaction, this is transfer pricing
Transfer pricing is not, in itself, illegal or necessarily abusive. What is illegal or abusive is transfer mispricing, also known as transfer pricing manipulation or abusive transfer pricing. (Transfer mispricing is a form of a more general phenomenon known as trade mispricing, which includes trade between unrelated or apparently unrelated parties an example is reinvoicing.) It is estimated that about 60 percent of international trade happens within, rather than between, multinationals: that is, across national boundaries but within the same corporate group. Suggestions have been made that this figure may be closer to 70 percent.
According to Indian Tax laws, a company can be termed as an associated enterprise with respect to the other enterprise, under the following conditions:
If the particular company is involved directly or indirectly in the management, control, or the capital of the other company.
If any person/persons of the respective company who is/are involved directly or indirectly in the management, control, or the capital of one company is/are involved directly or indirectly in the management, control, or the capital of the other company.
Apart from the above there are many deeming provisions enlisted under div 92A of the Income-tax Act, 1961.
We centralize transaction processing to attain sustainable structural tax improvement that increases shareholder value and cash flow. We help in global strategic planning of tax audits and dispute those results in flexibility to accommodate future business changes. We provide such services to get complete visibility across the supply chain through single ownership of Inventory.
Services we provide for transfer pricing :
- Preparation of Transfer Pricing policy and strategy
- Global Risk Assessment
- Transfer Pricing Agreements preparation.
- Transfer Pricing Documentation
- Planning and documentation of Specified Domestic Transactions
- Support in litigation and representation in front of various tribunals and courts
- Providing legal briefs / advises on tax avoidance while entering international transactions