Transfer Pricing
Transfer Pricing - An Overview
Transfer pricing is an accounting and taxation practice that allows for pricing transactions internally within businesses and between subsidiaries that operate under common control or ownership. The transfer pricing practice extends to cross-border transactions as well as domestic ones.
Transfer Pricing - An Overview
Transfer pricing is an accounting and taxation practice that allows for pricing transactions internally within businesses and between subsidiaries that operate under common control or ownership. The transfer pricing practice extends to cross-border transactions as well as domestic ones.
A transfer pricing study examines the pricing of transactions between related two or more associates. By applying and documenting various test methods, it is determined whether the transactions are conducted under market conditions and survive the scrutiny of the IRS and other tax authorities.
A study of transfer pricing shall justify how a particular method is selected for enterprises and transactions being reviewed.
Transfer Pricing Study for Indian Companies
All Indian companies are required to analyze their international transaction with respect to the Transfer Pricing Regulation and adhere to it by maintaining proper transaction records and documents.
NBC acts as the advisor to your company, especially in matters concerning the effective operation of your business in India. We can help you in countering the new Transfer Pricing Regulation in a cost-effective manner, without consuming much of your time. We provide you the appropriate solution after studying your business objectives and the nature of transactions that have been carried out.
The following step-by-step procedures explain our modus operandi.
A fact-finding exercise is carried out in order to analyze the various functions performed by the organization and the possible risks that can be encountered by each activity.
Select the appropriate method of transfer pricing and identify the parties who have been tested with the particular method.
Conduct a survey based on the database available from various national and international sources in order to identify the companies that can be benchmarked for the selected company and perform a financial analysis on the basis of them.
Prepare a consolidated report on the basis of the analysis and document it appropriately.
Issue the report in Form 3CEB as mandated by the Indian Income Tax Act, 1961.
NBC is also specialized in defending the transfer pricing policy of various companies in front of the policy officers and thus counter them in an efficient manner.
Transfer pricing study, litigation and consultants services under the Indian Transfer Pricing law By: P.K. De & Associates
Neeraj Bhagat & Company offer consulting on transfer pricing documentation in more qualitative and intelligent online study and the dispute on the basis of inputs issued by the clients. In addition, adequate tax advice will also suggest and consulting on setting ARMs length price and adoption of the most appropriate method. This documentation differs from across industries and one company to another, but in the Laws of Transfer Pricing and concepts. We will be providing similar functional elements comparison of publicly available databases, both locally and globally, after comparison the FAR analysis, based on economic and Indian market conditions. Our study involves the analysis of contemporaneous facts and research from public databases also to analyze correct Price Comparison of functional elements and the like.
Our best practical transfer pricing audit services directly enable us to develop more stringent, better quality products, and collaborate more effectively with our clients. Because are a company of impartial financial professionals, many of the leading law firms in India and worldwide also attended us to create this value and sustainable solutions to their multinational corporate clients as experts on transfer pricing litigation and arbitration.
Our consulting team has significant experience to a higher level, and work together with multinational clients and their legal and tax consultants to deliver the highest standard of case counseling and support practice, the application of sophisticated techniques based on the economy when it necessary, to address harder issues. Neeraj Bhagat & Company Clients range from some of the biggest known and most enterprises in the world for medium enterprises and through involving a number of iconic brands.
P.K.De Associates’ transfer pricing professionals help taxpayers to overseas documentation requirements in India and for the report preparation for transfer pricing documentation that analyze the nature of full competence in prices between companies. We also help multinationals with multiple FATS to prepare the global documentation, provided all documentation requirements efficiently and consistently. Our team of audit consultants have the expertise to know what the tax officials are looking for, and may help you preparing your documents properly the first time.
Frequently Asked Questions about Transfer Pricing
Auditing Services When two or more associated companies enter into a mutual contract during an international transaction in order to apportion a particular cost incurred in relation with a benefit, service or facility offered by any one or all of the companies, such a cost shall be calculated considering the arm’s length price of the particular benefit, service, or facility, as applicable.
According to sections 92, 92A, 92B, 92C, 92D, 92E and 92F, a company can be termed as an associated enterprise with respect to the other under the following circumstances. – If the respective company is involved directly or indirectly or with the help of one or more intermediaries 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 or with the help of one or more intermediaries in the management, control, or the capital of one company is/are involved directly or indirectly or with the help of one or more intermediaries in the management, control, or the capital of the other company.
The various procedures to calculate the arm’s length price with respect to an international transaction are the following.
Transactional net margin procedure
Resale price procedure
Comparable uncontrolled price procedure
Cost plus procedure
Profit split procedure
There are various other procedures that are prescribed by the Central Board of Direct Taxes, generally known as the Board.
The following documents have to be maintained when a company is involved in an international transaction.
The details of the ownership of the person with respect to the company. These include the ownership structure, the details of the shares, and information on ownerships held by any other company on it. A detailed profile of the foreign group to which the assessed company is associated with for the international transactions. The details such as name, address, country where tax returns are filed, and the legal status, etc., have to be furnished about the multinational group.
A detailed description of the business activities of both the assessed person and the associated group of companies with whom the former has been involved in international transaction. The details of the international transaction, such as the nature of the transaction, details of the property or services transferred, the terms contained in the transaction, and the amount and value of each transaction. The details of the functions carried out by such a transaction, the details of the risks involved and the value of the assets used or to be used by the assessed or the associated company that is involved in such a transaction.
The details of the records collected for the entire business or a particular division of the business during the period of the company’s business activity in which the foreign transaction has been involved. These include reports such as the estimates made on various market trends, forecasts about the market, budget analysis or any other such finance-related reports prepared by the company. The details of the uncontrolled transactions, if any, that has taken place with a third party during the period of the international transaction. The nature and the terms and conditions of such transaction have to be mentioned as they play an important role in deciding the value of the international transaction. The details of the analysis conducted in order to assess the impact of the uncontrolled transaction on the international transaction concerned. The details of the various procedures considered and the one adopted in deciding the arm’s length price with respect to an international transaction. The details should also include the details on why the particular method was adopted and how it was implemented successfully in order to decide the arm’s length price.
Any person who has involved in an international transaction in the previous year shall submit the report in Form 3CEB through a Chartered Accountant, duly verified by him, on or before the date prescribed by the authority, furnishing all the required details.
Since what is chosen is the “most appropriate method”, the concept of more than one appropriate price is a self-contradiction. But the proviso to section 92C(2) reads as under: “Provided that where more than one price may be determined by the most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such price.” The above proviso indicates that in the most appropriate method, which was chosen, there could be more than one price in which case the arithmetical mean will be taken. In other words, there could be more than one comparable and uncontrollable price, so that average could be adopted. Similarly, there could be more than one resale price or one cost plus price, so that the average can be adopted. The law does not, however contemplate more than one most appropriate method. Transfer pricing only when there is tax relevance.
An international transaction is one which takes place between a resident and a non resident or between two residents with a non resident associated concern as an intermediary. There is bound to be a tax impact for one or the other,so that transfer pricing become relevant , if not for the non- resident but atleast for the resident associate. Transfer pricing is bound to be relevant in such cases. It stands to reason, when the transfer pricing has no relevance at all for either party to the transaction, the rules would have no application, because the requirement of ascertainment of transfer pricing would not arise in such a case.
Transfer pricing rules relate to transactions. It is therefore reasonable to presume that the transaction covered in the last quarter of the previous year alone could be covered. There is possible view, that since it is an associate concern at any time during the year, all the transactions for the year are covered. The definition of “associated enterprise” in section 92A(2) would indicate, that an enterprise becomes an associate enterprise , if it becomes so “at any time during the previous year”. It would, therefore, mean that the associate enterprise is an associate enterprise for the whole year, so that the transaction for the period for which it was not associate enterprise may also be covered. This would, however, be a less plausible interpretation.
Domestic Transfer Pricing
Assessments from financial year 2012-13 would require application of transfer pricing rules for domestic transactions with related parties. Following is the overview of the latest developments in Domestic Transfer Pricing regulations.Section 92BA provides the meaning of Specified Domestic Transactions to which various other provisions relating to transfer pricing will apply. These include the following:
Domestic Transfer Pricing
Assessments from financial year 2012-13 would require application of transfer pricing rules for domestic transactions with related parties. Following is the overview of the latest developments in Domestic Transfer Pricing regulations.Section 92BA provides the meaning of Specified Domestic Transactions to which various other provisions relating to transfer pricing will apply. These include the following:
Threshold exemption
In the legal context there are no specific legislative restrictions on the type of skills that may be brought in nor the numbers of staff. However, under Government Policy employment visas to foreigners are issued only for jobs requiring high skills and expertise.
Consequential amendments
The Government authorities dealing in issues relating to expatriate employment in India are the Ministry of Home Affairs and RBI In general, employers who are employing expatriates in India must satisfy the following conditions:
Domestic Transactions
All foreign nationals who enter India must obtain an appropriate visa from an overseas Indian Consular Post in their home country prior to entering India. A Foreigner entering India for the purpose of employment must possess a valid employment visa. An Employment Visa is given only for jobs that require very high level of skills and expertise.
Related party transactions
Multiple-entry employment visas are valid for one to five years. In other cases it is given for a specified period depending upon the need of the sponsoring organization, availability of Indian experts in the particular field, the benefit to be gained by the foreign nationals presence and necessity of visiting neghbouring countries.
Threshold exemption
In the legal context there are no specific legislative restrictions on the type of skills that may be brought in nor the numbers of staff. However, under Government Policy employment visas to foreigners are issued only for jobs requiring high skills and expertise.
Consequential amendments
The Government authorities dealing in issues relating to expatriate employment in India are the Ministry of Home Affairs and RBI In general, employers who are employing expatriates in India must satisfy the following conditions:
Domestic Transactions
All foreign nationals who enter India must obtain an appropriate visa from an overseas Indian Consular Post in their home country prior to entering India. A Foreigner entering India for the purpose of employment must possess a valid employment visa. An Employment Visa is given only for jobs that require very high level of skills and expertise.
Related party transactions
Multiple-entry employment visas are valid for one to five years. In other cases it is given for a specified period depending upon the need of the sponsoring organization, availability of Indian experts in the particular field, the benefit to be gained by the foreign nationals presence and necessity of visiting neghbouring countries.
International Transactions versus Specified Domestic Transactions
- Eligible assessee All enterprises with international transactions All enterprises in transactions with related parties listed in section 40A(2)(b) of the Act.
- All international transactions with associated enterprise as defined under section 92B
- Compensatory adjustment consequent on arm’s length price addition will not be available in the assessment of the other party to the transaction
- Tax holiday benefits are not available to non-residents. Where, however, an income is brought to tax as that of PE from an activity for a resident is eligible,
- ole of Transfer Pricing Officer Section 92CA(2) empowers the Transfer Pricing Officers to determine the arm’s length price.
- Safe Harbour Provisions Rule prescribed allow 5 per cent under specified circumstances under Notifications S.O. 1871 (E).
- Advance Pricing Agreement Rule 10F to 10T vide Notification No.2005(E), dated 30-8- 2012 ([2012)] 346 ITR (st.) 184) .
- Computation provision Section 92C providing for computation is common for international and domestic transactions
- Maintenance, keeping information and documents Section 92D is common both for international and domestic transactions.
- Audit report Section 92E is common both for international and domestic transactions.
Transfer Pricing – An Overview
Transfer pricing is an accounting and taxation practice that allows for pricing transactions internally within businesses and between subsidiaries that operate under common control or ownership. The transfer pricing practice extends to cross-border transactions as well as domestic ones.
Transfer Pricing – An Overview
Transfer pricing is an accounting and taxation practice that allows for pricing transactions internally within businesses and between subsidiaries that operate under common control or ownership. The transfer pricing practice extends to cross-border transactions as well as domestic ones.
A transfer pricing study examines the pricing of transactions between related two or more associates. By applying and documenting various test methods, it is determined whether the transactions are conducted under market conditions and survive the scrutiny of the IRS and other tax authorities.
A study of transfer pricing shall justify how a particular method is selected for enterprises and transactions being reviewed.
Transfer Pricing Study for Indian Companies
All Indian companies are required to analyze their international transaction with respect to the Transfer Pricing Regulation and adhere to it by maintaining proper transaction records and documents.
NBC acts as the advisor to your company, especially in matters concerning the effective operation of your business in India. We can help you in countering the new Transfer Pricing Regulation in a cost-effective manner, without consuming much of your time. We provide you the appropriate solution after studying your business objectives and the nature of transactions that have been carried out.
The following step-by-step procedures explain our modus operandi.
A fact-finding exercise is carried out in order to analyze the various functions performed by the organization and the possible risks that can be encountered by each activity.
Select the appropriate method of transfer pricing and identify the parties who have been tested with the particular method.
Conduct a survey based on the database available from various national and international sources in order to identify the companies that can be benchmarked for the selected company and perform a financial analysis on the basis of them.
Prepare a consolidated report on the basis of the analysis and document it appropriately.
Issue the report in Form 3CEB as mandated by the Indian Income Tax Act, 1961.
NBC is also specialized in defending the transfer pricing policy of various companies in front of the policy officers and thus counter them in an efficient manner.
Transfer pricing study, litigation and consultants services under the Indian Transfer Pricing law By: P.K. De & Associates
Neeraj Bhagat & Company offer consulting on transfer pricing documentation in more qualitative and intelligent online study and the dispute on the basis of inputs issued by the clients. In addition, adequate tax advice will also suggest and consulting on setting ARMs length price and adoption of the most appropriate method. This documentation differs from across industries and one company to another, but in the Laws of Transfer Pricing and concepts. We will be providing similar functional elements comparison of publicly available databases, both locally and globally, after comparison the FAR analysis, based on economic and Indian market conditions. Our study involves the analysis of contemporaneous facts and research from public databases also to analyze correct Price Comparison of functional elements and the like.
Our best practical transfer pricing audit services directly enable us to develop more stringent, better quality products, and collaborate more effectively with our clients. Because are a company of impartial financial professionals, many of the leading law firms in India and worldwide also attended us to create this value and sustainable solutions to their multinational corporate clients as experts on transfer pricing litigation and arbitration.
Our consulting team has significant experience to a higher level, and work together with multinational clients and their legal and tax consultants to deliver the highest standard of case counseling and support practice, the application of sophisticated techniques based on the economy when it necessary, to address harder issues. Neeraj Bhagat & Company Clients range from some of the biggest known and most enterprises in the world for medium enterprises and through involving a number of iconic brands.
P.K.De Associates’ transfer pricing professionals help taxpayers to overseas documentation requirements in India and for the report preparation for transfer pricing documentation that analyze the nature of full competence in prices between companies. We also help multinationals with multiple FATS to prepare the global documentation, provided all documentation requirements efficiently and consistently. Our team of audit consultants have the expertise to know what the tax officials are looking for, and may help you preparing your documents properly the first time.
Frequently Asked Questions about Transfer Pricing
Auditing Services When two or more associated companies enter into a mutual contract during an international transaction in order to apportion a particular cost incurred in relation with a benefit, service or facility offered by any one or all of the companies, such a cost shall be calculated considering the arm’s length price of the particular benefit, service, or facility, as applicable.
According to sections 92, 92A, 92B, 92C, 92D, 92E and 92F, a company can be termed as an associated enterprise with respect to the other under the following circumstances. – If the respective company is involved directly or indirectly or with the help of one or more intermediaries 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 or with the help of one or more intermediaries in the management, control, or the capital of one company is/are involved directly or indirectly or with the help of one or more intermediaries in the management, control, or the capital of the other company.
The various procedures to calculate the arm’s length price with respect to an international transaction are the following.
Transactional net margin procedure
Resale price procedure
Comparable uncontrolled price procedure
Cost plus procedure
Profit split procedure
There are various other procedures that are prescribed by the Central Board of Direct Taxes, generally known as the Board.
The following documents have to be maintained when a company is involved in an international transaction.
The details of the ownership of the person with respect to the company. These include the ownership structure, the details of the shares, and information on ownerships held by any other company on it. A detailed profile of the foreign group to which the assessed company is associated with for the international transactions. The details such as name, address, country where tax returns are filed, and the legal status, etc., have to be furnished about the multinational group.
A detailed description of the business activities of both the assessed person and the associated group of companies with whom the former has been involved in international transaction. The details of the international transaction, such as the nature of the transaction, details of the property or services transferred, the terms contained in the transaction, and the amount and value of each transaction. The details of the functions carried out by such a transaction, the details of the risks involved and the value of the assets used or to be used by the assessed or the associated company that is involved in such a transaction.
The details of the records collected for the entire business or a particular division of the business during the period of the company’s business activity in which the foreign transaction has been involved. These include reports such as the estimates made on various market trends, forecasts about the market, budget analysis or any other such finance-related reports prepared by the company. The details of the uncontrolled transactions, if any, that has taken place with a third party during the period of the international transaction. The nature and the terms and conditions of such transaction have to be mentioned as they play an important role in deciding the value of the international transaction. The details of the analysis conducted in order to assess the impact of the uncontrolled transaction on the international transaction concerned. The details of the various procedures considered and the one adopted in deciding the arm’s length price with respect to an international transaction. The details should also include the details on why the particular method was adopted and how it was implemented successfully in order to decide the arm’s length price.
Any person who has involved in an international transaction in the previous year shall submit the report in Form 3CEB through a Chartered Accountant, duly verified by him, on or before the date prescribed by the authority, furnishing all the required details.
Since what is chosen is the “most appropriate method”, the concept of more than one appropriate price is a self-contradiction. But the proviso to section 92C(2) reads as under: “Provided that where more than one price may be determined by the most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such price.” The above proviso indicates that in the most appropriate method, which was chosen, there could be more than one price in which case the arithmetical mean will be taken. In other words, there could be more than one comparable and uncontrollable price, so that average could be adopted. Similarly, there could be more than one resale price or one cost plus price, so that the average can be adopted. The law does not, however contemplate more than one most appropriate method. Transfer pricing only when there is tax relevance.
An international transaction is one which takes place between a resident and a non resident or between two residents with a non resident associated concern as an intermediary. There is bound to be a tax impact for one or the other,so that transfer pricing become relevant , if not for the non- resident but atleast for the resident associate. Transfer pricing is bound to be relevant in such cases. It stands to reason, when the transfer pricing has no relevance at all for either party to the transaction, the rules would have no application, because the requirement of ascertainment of transfer pricing would not arise in such a case.
Transfer pricing rules relate to transactions. It is therefore reasonable to presume that the transaction covered in the last quarter of the previous year alone could be covered. There is possible view, that since it is an associate concern at any time during the year, all the transactions for the year are covered. The definition of “associated enterprise” in section 92A(2) would indicate, that an enterprise becomes an associate enterprise , if it becomes so “at any time during the previous year”. It would, therefore, mean that the associate enterprise is an associate enterprise for the whole year, so that the transaction for the period for which it was not associate enterprise may also be covered. This would, however, be a less plausible interpretation.
Domestic Transfer Pricing
Assessments from financial year 2012-13 would require application of transfer pricing rules for domestic transactions with related parties. Following is the overview of the latest developments in Domestic Transfer Pricing regulations.Section 92BA provides the meaning of Specified Domestic Transactions to which various other provisions relating to transfer pricing will apply. These include the following:
Domestic Transfer Pricing
Assessments from financial year 2012-13 would require application of transfer pricing rules for domestic transactions with related parties. Following is the overview of the latest developments in Domestic Transfer Pricing regulations.Section 92BA provides the meaning of Specified Domestic Transactions to which various other provisions relating to transfer pricing will apply. These include the following:
Threshold exemption
In the legal context there are no specific legislative restrictions on the type of skills that may be brought in nor the numbers of staff. However, under Government Policy employment visas to foreigners are issued only for jobs requiring high skills and expertise.
Consequential amendments
The Government authorities dealing in issues relating to expatriate employment in India are the Ministry of Home Affairs and RBI In general, employers who are employing expatriates in India must satisfy the following conditions:
Domestic Transactions
All foreign nationals who enter India must obtain an appropriate visa from an overseas Indian Consular Post in their home country prior to entering India. A Foreigner entering India for the purpose of employment must possess a valid employment visa. An Employment Visa is given only for jobs that require very high level of skills and expertise.
Related party transactions
Multiple-entry employment visas are valid for one to five years. In other cases it is given for a specified period depending upon the need of the sponsoring organization, availability of Indian experts in the particular field, the benefit to be gained by the foreign nationals presence and necessity of visiting neghbouring countries.
Threshold exemption
In the legal context there are no specific legislative restrictions on the type of skills that may be brought in nor the numbers of staff. However, under Government Policy employment visas to foreigners are issued only for jobs requiring high skills and expertise.
Consequential amendments
The Government authorities dealing in issues relating to expatriate employment in India are the Ministry of Home Affairs and RBI In general, employers who are employing expatriates in India must satisfy the following conditions:
Domestic Transactions
All foreign nationals who enter India must obtain an appropriate visa from an overseas Indian Consular Post in their home country prior to entering India. A Foreigner entering India for the purpose of employment must possess a valid employment visa. An Employment Visa is given only for jobs that require very high level of skills and expertise.
Related party transactions
Multiple-entry employment visas are valid for one to five years. In other cases it is given for a specified period depending upon the need of the sponsoring organization, availability of Indian experts in the particular field, the benefit to be gained by the foreign nationals presence and necessity of visiting neghbouring countries.
International Transactions versus Specified Domestic Transactions
- Eligible assessee All enterprises with international transactions All enterprises in transactions with related parties listed in section 40A(2)(b) of the Act.
- All international transactions with associated enterprise as defined under section 92B
- Compensatory adjustment consequent on arm’s length price addition will not be available in the assessment of the other party to the transaction
- Tax holiday benefits are not available to non-residents. Where, however, an income is brought to tax as that of PE from an activity for a resident is eligible,
- ole of Transfer Pricing Officer Section 92CA(2) empowers the Transfer Pricing Officers to determine the arm’s length price.
- Safe Harbour Provisions Rule prescribed allow 5 per cent under specified circumstances under Notifications S.O. 1871 (E).
- Advance Pricing Agreement Rule 10F to 10T vide Notification No.2005(E), dated 30-8- 2012 ([2012)] 346 ITR (st.) 184) .
- Computation provision Section 92C providing for computation is common for international and domestic transactions
- Maintenance, keeping information and documents Section 92D is common both for international and domestic transactions.
- Audit report Section 92E is common both for international and domestic transactions.
Transfer Pricing – An Overview
Transfer pricing is an accounting and taxation practice that allows for pricing transactions internally within businesses and between subsidiaries that operate under common control or ownership. The transfer pricing practice extends to cross-border transactions as well as domestic ones.
Transfer Pricing – An Overview
Transfer pricing is an accounting and taxation practice that allows for pricing transactions internally within businesses and between subsidiaries that operate under common control or ownership. The transfer pricing practice extends to cross-border transactions as well as domestic ones.
A transfer pricing study examines the pricing of transactions between related two or more associates. By applying and documenting various test methods, it is determined whether the transactions are conducted under market conditions and survive the scrutiny of the IRS and other tax authorities.
A study of transfer pricing shall justify how a particular method is selected for enterprises and transactions being reviewed.
Transfer Pricing Study for Indian Companies
All Indian companies are required to analyze their international transaction with respect to the Transfer Pricing Regulation and adhere to it by maintaining proper transaction records and documents.
NBC acts as the advisor to your company, especially in matters concerning the effective operation of your business in India. We can help you in countering the new Transfer Pricing Regulation in a cost-effective manner, without consuming much of your time. We provide you the appropriate solution after studying your business objectives and the nature of transactions that have been carried out.
The following step-by-step procedures explain our modus operandi.
A fact-finding exercise is carried out in order to analyze the various functions performed by the organization and the possible risks that can be encountered by each activity.
Select the appropriate method of transfer pricing and identify the parties who have been tested with the particular method.
Conduct a survey based on the database available from various national and international sources in order to identify the companies that can be benchmarked for the selected company and perform a financial analysis on the basis of them.
Prepare a consolidated report on the basis of the analysis and document it appropriately.
Issue the report in Form 3CEB as mandated by the Indian Income Tax Act, 1961.
NBC is also specialized in defending the transfer pricing policy of various companies in front of the policy officers and thus counter them in an efficient manner.
Transfer pricing study, litigation and consultants services under the Indian Transfer Pricing law By: P.K. De & Associates
Neeraj Bhagat & Company offer consulting on transfer pricing documentation in more qualitative and intelligent online study and the dispute on the basis of inputs issued by the clients. In addition, adequate tax advice will also suggest and consulting on setting ARMs length price and adoption of the most appropriate method. This documentation differs from across industries and one company to another, but in the Laws of Transfer Pricing and concepts. We will be providing similar functional elements comparison of publicly available databases, both locally and globally, after comparison the FAR analysis, based on economic and Indian market conditions. Our study involves the analysis of contemporaneous facts and research from public databases also to analyze correct Price Comparison of functional elements and the like.
Our best practical transfer pricing audit services directly enable us to develop more stringent, better quality products, and collaborate more effectively with our clients. Because are a company of impartial financial professionals, many of the leading law firms in India and worldwide also attended us to create this value and sustainable solutions to their multinational corporate clients as experts on transfer pricing litigation and arbitration.
Our consulting team has significant experience to a higher level, and work together with multinational clients and their legal and tax consultants to deliver the highest standard of case counseling and support practice, the application of sophisticated techniques based on the economy when it necessary, to address harder issues. Neeraj Bhagat & Company Clients range from some of the biggest known and most enterprises in the world for medium enterprises and through involving a number of iconic brands.
P.K.De Associates’ transfer pricing professionals help taxpayers to overseas documentation requirements in India and for the report preparation for transfer pricing documentation that analyze the nature of full competence in prices between companies. We also help multinationals with multiple FATS to prepare the global documentation, provided all documentation requirements efficiently and consistently. Our team of audit consultants have the expertise to know what the tax officials are looking for, and may help you preparing your documents properly the first time.
Frequently Asked Questions about Transfer Pricing
Auditing Services When two or more associated companies enter into a mutual contract during an international transaction in order to apportion a particular cost incurred in relation with a benefit, service or facility offered by any one or all of the companies, such a cost shall be calculated considering the arm’s length price of the particular benefit, service, or facility, as applicable.
According to sections 92, 92A, 92B, 92C, 92D, 92E and 92F, a company can be termed as an associated enterprise with respect to the other under the following circumstances. – If the respective company is involved directly or indirectly or with the help of one or more intermediaries 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 or with the help of one or more intermediaries in the management, control, or the capital of one company is/are involved directly or indirectly or with the help of one or more intermediaries in the management, control, or the capital of the other company.
The various procedures to calculate the arm’s length price with respect to an international transaction are the following.
Transactional net margin procedure
Resale price procedure
Comparable uncontrolled price procedure
Cost plus procedure
Profit split procedure
There are various other procedures that are prescribed by the Central Board of Direct Taxes, generally known as the Board.
The following documents have to be maintained when a company is involved in an international transaction.
The details of the ownership of the person with respect to the company. These include the ownership structure, the details of the shares, and information on ownerships held by any other company on it. A detailed profile of the foreign group to which the assessed company is associated with for the international transactions. The details such as name, address, country where tax returns are filed, and the legal status, etc., have to be furnished about the multinational group.
A detailed description of the business activities of both the assessed person and the associated group of companies with whom the former has been involved in international transaction. The details of the international transaction, such as the nature of the transaction, details of the property or services transferred, the terms contained in the transaction, and the amount and value of each transaction. The details of the functions carried out by such a transaction, the details of the risks involved and the value of the assets used or to be used by the assessed or the associated company that is involved in such a transaction.
The details of the records collected for the entire business or a particular division of the business during the period of the company’s business activity in which the foreign transaction has been involved. These include reports such as the estimates made on various market trends, forecasts about the market, budget analysis or any other such finance-related reports prepared by the company. The details of the uncontrolled transactions, if any, that has taken place with a third party during the period of the international transaction. The nature and the terms and conditions of such transaction have to be mentioned as they play an important role in deciding the value of the international transaction. The details of the analysis conducted in order to assess the impact of the uncontrolled transaction on the international transaction concerned. The details of the various procedures considered and the one adopted in deciding the arm’s length price with respect to an international transaction. The details should also include the details on why the particular method was adopted and how it was implemented successfully in order to decide the arm’s length price.
Any person who has involved in an international transaction in the previous year shall submit the report in Form 3CEB through a Chartered Accountant, duly verified by him, on or before the date prescribed by the authority, furnishing all the required details.
Since what is chosen is the “most appropriate method”, the concept of more than one appropriate price is a self-contradiction. But the proviso to section 92C(2) reads as under: “Provided that where more than one price may be determined by the most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such price.” The above proviso indicates that in the most appropriate method, which was chosen, there could be more than one price in which case the arithmetical mean will be taken. In other words, there could be more than one comparable and uncontrollable price, so that average could be adopted. Similarly, there could be more than one resale price or one cost plus price, so that the average can be adopted. The law does not, however contemplate more than one most appropriate method. Transfer pricing only when there is tax relevance.
An international transaction is one which takes place between a resident and a non resident or between two residents with a non resident associated concern as an intermediary. There is bound to be a tax impact for one or the other,so that transfer pricing become relevant , if not for the non- resident but atleast for the resident associate. Transfer pricing is bound to be relevant in such cases. It stands to reason, when the transfer pricing has no relevance at all for either party to the transaction, the rules would have no application, because the requirement of ascertainment of transfer pricing would not arise in such a case.
Transfer pricing rules relate to transactions. It is therefore reasonable to presume that the transaction covered in the last quarter of the previous year alone could be covered. There is possible view, that since it is an associate concern at any time during the year, all the transactions for the year are covered. The definition of “associated enterprise” in section 92A(2) would indicate, that an enterprise becomes an associate enterprise , if it becomes so “at any time during the previous year”. It would, therefore, mean that the associate enterprise is an associate enterprise for the whole year, so that the transaction for the period for which it was not associate enterprise may also be covered. This would, however, be a less plausible interpretation.
Domestic Transfer Pricing
Assessments from financial year 2012-13 would require application of transfer pricing rules for domestic transactions with related parties. Following is the overview of the latest developments in Domestic Transfer Pricing regulations.Section 92BA provides the meaning of Specified Domestic Transactions to which various other provisions relating to transfer pricing will apply. These include the following:
Domestic Transfer Pricing
Assessments from financial year 2012-13 would require application of transfer pricing rules for domestic transactions with related parties. Following is the overview of the latest developments in Domestic Transfer Pricing regulations.Section 92BA provides the meaning of Specified Domestic Transactions to which various other provisions relating to transfer pricing will apply. These include the following:
Threshold exemption
In the legal context there are no specific legislative restrictions on the type of skills that may be brought in nor the numbers of staff. However, under Government Policy employment visas to foreigners are issued only for jobs requiring high skills and expertise.
Consequential amendments
The Government authorities dealing in issues relating to expatriate employment in India are the Ministry of Home Affairs and RBI In general, employers who are employing expatriates in India must satisfy the following conditions:
Domestic Transactions
All foreign nationals who enter India must obtain an appropriate visa from an overseas Indian Consular Post in their home country prior to entering India. A Foreigner entering India for the purpose of employment must possess a valid employment visa. An Employment Visa is given only for jobs that require very high level of skills and expertise.
Related party transactions
Multiple-entry employment visas are valid for one to five years. In other cases it is given for a specified period depending upon the need of the sponsoring organization, availability of Indian experts in the particular field, the benefit to be gained by the foreign nationals presence and necessity of visiting neghbouring countries.
Threshold exemption
In the legal context there are no specific legislative restrictions on the type of skills that may be brought in nor the numbers of staff. However, under Government Policy employment visas to foreigners are issued only for jobs requiring high skills and expertise.
Consequential amendments
The Government authorities dealing in issues relating to expatriate employment in India are the Ministry of Home Affairs and RBI In general, employers who are employing expatriates in India must satisfy the following conditions:
Domestic Transactions
All foreign nationals who enter India must obtain an appropriate visa from an overseas Indian Consular Post in their home country prior to entering India. A Foreigner entering India for the purpose of employment must possess a valid employment visa. An Employment Visa is given only for jobs that require very high level of skills and expertise.
Related party transactions
Multiple-entry employment visas are valid for one to five years. In other cases it is given for a specified period depending upon the need of the sponsoring organization, availability of Indian experts in the particular field, the benefit to be gained by the foreign nationals presence and necessity of visiting neghbouring countries.
International Transactions versus Specified Domestic Transactions
- Eligible assessee All enterprises with international transactions All enterprises in transactions with related parties listed in section 40A(2)(b) of the Act.
- All international transactions with associated enterprise as defined under section 92B
- Compensatory adjustment consequent on arm’s length price addition will not be available in the assessment of the other party to the transaction
- Tax holiday benefits are not available to non-residents. Where, however, an income is brought to tax as that of PE from an activity for a resident is eligible,
- ole of Transfer Pricing Officer Section 92CA(2) empowers the Transfer Pricing Officers to determine the arm’s length price.
- Safe Harbour Provisions Rule prescribed allow 5 per cent under specified circumstances under Notifications S.O. 1871 (E).
- Advance Pricing Agreement Rule 10F to 10T vide Notification No.2005(E), dated 30-8- 2012 ([2012)] 346 ITR (st.) 184) .
- Computation provision Section 92C providing for computation is common for international and domestic transactions
- Maintenance, keeping information and documents Section 92D is common both for international and domestic transactions.
- Audit report Section 92E is common both for international and domestic transactions.
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