Taxation And Transfer Pricing Issues In IndiaThe 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?