International Tax and TP

International Tax and tp

Indian tax and regulatory provisions are ever-changing and dynamic in nature. This poses serious challenges to multinationals across the world that look to invest or establish their presence in India. It is very important to understand India’s tax and regulatory policies for the smooth running of businesses in India.

Further, foreign corporates and multinationals are always under detailed scrutiny of revenue authorities in India. Further, there could be situations of tax uncertainty and litigation which might result in tax demands. Accordingly, it has become crucial to understand the potential impact of new developments in the tax and regulatory spheres and consequently prepare for the challenges.

In this regard, our team comprises of dedicated tax professionals with in-depth technical knowledge and practical experience, who the client can trust in relation to corporate tax and regulatory matters. We provide advice on various tax matters and helps clients in mitigating the risk by managing the complexities of multiple tax systems and cross-border challenges.

We provide the following services relating to International tax:

  • International Tax interpretation, advisory and compliance
  • Tax Advisory on a Double Taxation Avoidance Agreement and Multi level Instruments
  • Tax Advisory on GAAR, BEPS, POEM, ICDS
  • Advisory on Constitution of Permanent Establishment and study of attribution of profits
  • Advisory on repatriation of profits outside India
  • Representation before revenue authorities at time of assessments, appeals, refunds and for obtaining lower withholding tax certificates
  • Certification service relating to overseas payments as well as under the statute
  • Drafting of application and applying for advance rulings, MAP, APA etc.

Transfer Pricing

We provide the following services relating to Transfer Pricing:

  • Issue & Uploading of Transfer pricing Audit report in Form 3CEB wrt international and specified domestic transaction entered into by associated enterprises.
  • Country-by-Country Reporting
  • Benchmarking and issue of TP study report
  • Structuring Cost Sharing Arrangements for domestic and international inter-company transactions
  • Supply Chain Restructuring
  • Advisory relating to maintenance of proper documentation from TP perspective.
  • Representation before Transfer Pricing Officer
  • Transfer Pricing Litigation before higher authorities CIT(Appeals), Dispute Resolution Panel, Income Tax Appellate Tribunal (ITAT)
  • Assistance in Drafting Agreements from a transfer pricing perspective
  • Advisory relating to Advance Pricing Agreement and Safe Harbor Rules.

Our key differentiators

  • Dedicated advisors with adequate experience and expertise to assist a client on international tax matters
  • Industry based focus and specialization
  • Regular updates relating to the latest judicial pronouncements, notifications

Transfer Pricing Audit in India

As per provisions of Indian Transfer Pricing Regulations, apart from Tax audit and the statutory audit, every assesse who has entered into international transaction during the year or specified domestic transactions during the year are required to conduct their transfer pricing audit and furnish a transfer pricing audit report also called as accountant report in form 3CEB on or before 30th November of each year. This is called a Transfer Pricing Audit in India.

Transfer Pricing Study or TP Study

Further, every assessee has to maintain proper Transfer Pricing documentation of international and domestic transactions which will be asked by the Transfer Pricing officer at the time of scrutiny assessment. This is called a Transfer Pricing Study or TP Study or Benchmarking study. Besides documentation, the Transfer pricing study report also contains methods applied for determining arm’s length price as well as the manner of arriving at same.

It may be noted that failure to obtain a Transfer Pricing Audit report or maintaining transfer pricing documentation in form of a TP study or transfer pricing study report would attract a heavy penalty.

Transfer Pricing Audit Limit

For international transactions, there is no monetary limit for conducting transfer pricing audit, However, for domestic transactions, a transfer pricing audit would be required only if the value of transactions exceed Rs 20 crore.

Type of Transfer Pricing methods

Section 92 C read with Rules 10B and 10AB has prescribed 6 methods for determining arm’s length price namely,

  • Comparable Uncontrolled Price method [CUP method]
  • Resale Price method [RPM method]
  • Cost-plus method [CPM method]
  • Profit Split method [PSM method]
  • Transactional Net Margin method [TNMM]
  • Any other method as may be prescribed by CBDT. CBDT has prescribed “any other method” by notifying Rule 10AB we 23rd March 2012

Out of the above, the First 5 methods are OECD recognized methods. Further, OECD has divided the methods above in 2 categories.

Traditional Transactions method [Also called as Transactional Based Approach]. Here CUP, RPM, and CPM are used.

Transactional profits method. Here, PSM and TNMM are used.