India is Strengthening Transfer Pricing Provisions

Ozg Transfer Pricing Consultant

Ozg Center | London | New Delhi | New York | Mumbai

Back Office Phone # 0091-9811415861-72-84-92-94

Email: transfer.pricing@ozg.co.in

www.TransferPricingConsultant.com

New Delhi, June 13 (ANI): Finance Minister Pranab Mukherjee on Monday said India is strengthening transfer pricing provisions to check misuse of the provisions and efforts to shift profit to another country.
“In the present era of economic globalization and continued expansion of cross-border business dealings and electronic commerce have put international taxation and transfer pricing on spotlight. These sunrise areas of taxation are new focus areas for augmentation of tax collection, for protecting tax base and for harmonization of rules and tax rates between the tax regimes in different countries,” he said.
“We have focused our efforts in this area by creating Directorate of International Taxation and Directorate of Transfer Pricing. In the last financial year, Directorate of International Taxation has mobilized tax revenue of Rs.22, 697 crore and Directorate of Transfer Pricing has detected mis-pricing of Rs.22, 838 crore, which is a reflection of our progress in administering international taxation and transfer pricing in India,” he added.
Mukherjee said the international taxissues connected to cross border transaction are complicated and tedious.
“These issues range from source of income, characterization of income, attribution of income to source or residence country and taxing right over income. Similarly, transfer pricing poses problems with increase in cross border trade including within multinational enterprises located in developed, developing and undeveloped countries,” he said.
“The variety of inter-company transactions, increased global business restructuring and location of companies in various tax jurisdictions have brought several challenges to the tax administration on transfer pricing rules,” he added.
Mukherjee further said that as more countries introduce transfer pricing rules and tax authorities intensify tax scrutiny of transactions under transfer pricing rules, there is an increase in cost of compliance and litigation, which are significant challenges before the business.
“Further, cross border transactions include mergers, acquisitions, joint ventures, which involves complex issues of international taxation and transfer pricing. The Organisation for Economic Cooperation and Development (OECD) transfer price guidelines on business restructuring would provide helpful guidance for tax administration as well as business,” he said.
“Tax competition driven by the presence of tax havens has created an unhealthy situation that has helped individuals to park substantial undisclosed income outside their countries. This is also true of some Indian citizens and residents, in the process denying legitimate tax revenues to the country. The Government of India has committed to vigorously pursue all the necessary steps in coordination with countries concerned on this issue,” he added.
Transfer pricing refers to the setting, analysis, documentation, and adjustment of charges made between related parties for goods, services, or use of property (including intangible property). Transfer prices among components of an enterprise may be used to reflect allocation of resources among such components, or for other purposes.
Pranab Mukherjee was addressing the participating national and international delegates after inaugurating a high level two day International Seminar on “Adapting Tax Systems and International Tax Rules to the New Global Environment: A Shared Challenge for India and the OECD” at Vigyan Bhavan here. (ANI)
13 Jun 2011 / newstrackindia

Ozg Transfer Pricing Consultant

Ozg Center | London | New Delhi | New York | Mumbai

Back Office Phone # 0091-9811415861-72-84-92-94

Email: transfer.pricing@ozg.co.in

www.TransferPricingConsultant.com

Advertisements

Comments are closed.