Taxation And Transfer Pricing Issues In India

The variance in tax rates across different countries prompts many corporations which operate in more than one country to shift their profits to low-tax locations. This results in tax revenue loss to countries with high tax regimes. Transfer pricing legislation is used as a tool to curb tax avoidance by manipulating prices charged on intra-group cross-border transactions in such a way as to maximize the taxable profits in low tax jurisdictions and minimize such profits in high tax countries.

The following questions have been addressed in this article:

What is Transfer Pricing?
Who are “associated enterprises?”
What transactions are covered within the purview of transfer pricing?

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