Transfer Pricing In M&E For Nadt 30.07.2009
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Presentation at National Academy of Direct Taxes (NADT), Nagpur on transfer pricing issues in Media & Entertainment

Presentation at National Academy of Direct Taxes (NADT), Nagpur on transfer pricing issues in Media & Entertainment

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Transfer Pricing In M&E For Nadt 30.07.2009 Transfer Pricing In M&E For Nadt 30.07.2009 Presentation Transcript

  • Transfer Pricing in Media & Entertainment Industry Presentation in ‘National Academy of Direct Taxes (NADT)’ on July 30, 2009 Presented By, Romesh S A Sankhe
  • ROAD MAP ► Importance of the M&E Sector in India and key happenings ► Key transfer pricing issues in M&E ► Recent important judicial decisions of transfer pricing in India ► Recent global developments & emerging concepts ► Key takeaways July 30, 2009 Page 2 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Importance of M&E sector in India and key happenings July 30, 2009 Page 3 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • M&E Sector - Key Segments ► The Indian Media and Entertainment (M&E) Industry can be categorized as follows; Television Print (Primarily Newspaper and Magazines) Filmed Entertainment (Movies) Radio Music Animation Gaming Outdoor Advertisement such as Concerts etc July 30, 2009 Page 4 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Sector Performance in India Rs. Billion 2005 2006 2007 2008 CAGR Change % (05-08) Television 163.3 182.5 211.3 240.5 12% 16% 14% 14% Print Media 117.1 138.6 160.4 172.6 18% 16% 8% 14% Filmed 66.9 81.7 96.4 109.3 Entertainment 22% 28% 13% 18% Radio 4.9 6.0 7.4 8.4 22% 23% 14% 20% Music 8.3 7.8 7.4 7.3 -6% -5% -1% -4% Animation , Gaming 24.5 28.4 37.1 45.9 19% & VFX, Out-of-home 16% 31% 24% advertising & Online Advertising Total M & E Industry 385.0 445.0 520.0 584.0 16% 17% 12% 15% Source :- FICCI FRAMES 2009 by FICCI-KPMG July 30, 2009 Page 5 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Recent Key Changes ► Indian M & E Industry has grown at a rate of 12.4% p.a. during 2008 with an size of Rs.584 billion, over the next five years the industry is projected to grow at CAGR of 12.5% p.a. to reach the size of Rs.1052 billion by 2013; ► The segments with highest rates of growth were online advertising, out-of-home advertising and the radio industry ► followed by Animation, Gaming & VFX, and Television Industry ► In 2008, number of M&E deals grown from 59(2007) to 85, valued at USD 1.7 billion. The inflows in the form of investments are; ► Disney’s acquisition of 15% stake in UTV Global broadcasting ► NBC universal’s acquisition of 26% stake in NDTV Network Plc ► Morgan Stanley and India Infrastructure Holding Fund’s USD 60 mn in Hathway Cable and Datacom ► DE Shaw’s acquisition of additional stake in Amar Ujala ► Goldeman Sachs & Lehman brother’s investment of USD 50 mn in out-of-home (OOH) advertising subsidiary ENIL ► Warbugr Pincus’s USD 75 mn investment in Laqshya Media July 30, 2009 Page 6 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Recent Key Changes ► Indian Film Industry declared as ‘Industry’ in 2000 under IDBI Act ► Corportisation of the Film Industry lead to more organized & transparent business model ► Liberalized FDI norms ► 100% in Film, Advertisement, non-news broadcast & magazines, ► 49% in cable ► 26% in news, print etc ► Availability of finance from banks compare to old source of financing from private lenders, ► Indo-foreign collaborations for Media, film ventures, etc such TOI- Reuters, IBN-CNN, TV18-CNBC, ADAG-Spielberg, YRF-Walt Disney, Sippy-Warner Bros, etc ► Foreign countries such as Switzerland, UK, Germany, Italy, Brazil entered into co-production bilateral agreements with India offering incentive to the Indian Media Companies July 30, 2009 Page 7 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Key Transfer Pricing Issues in M&E July 30, 2009 Page 8 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Key Transfer Pricing Issues ► Certain key cross border transactions in the Indian M&E sector are as under : Overseas Film Distribution Payment of Royalty Setting up of subsidiary for business support, marketing etc. Availing services of professionals employed by the overseas company Financing of the subsidiary company Reimbursement of expenses Use of loss making comparables in the benchmarking study Some of the above issues are discussed herewith through case studies July 30, 2009 Page 9 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Film Distribution – a case study ► Facts of the case ABC Ltd who acquired the overseas rights of a Hindi Film, distributes it through its subsidiaries in USA, UK & South Africa and through third party agents in rest of the world. The terms of the arrangement with various entities are as follows; Country Terms of Film Distribution Terms regarding the reimbursement of advt. and other related expenses USA No Minimum Guarantee & 10% Commission on net revenues1 On actual without any markup UK No Minimum Guarantee & 10% Commission on net revenues1 On actual without any markup South Africa No Minimum Guarantee & 10% Commission on net revenues1 On actual without any markup UAE No Minimum Guarantee & 5% Commission on Gross On actual without any markup revenues Nepal No Minimum Guarantee & 15% Commission on net revenues1 On actual without any markup Malaysia Certain Minimum Guarantee & 30% Commission On actual without any markup Germany No Minimum Guarantee & 5% Commission on net revenues1 On actual without any markup Russia No Minimum Guarantee & 5% Commission on net revenues1 On actual without any markup France Outright Purchase Not Applicable Canada Outright Purchase Not Applicable Australia Outright Purchase Not Applicable 1. Net revenues = Gross revenue – exhibitors share – taxes – cost of print July 30, 2009 Page 10 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Film Distribution – a case study ► Step 1 – Business Study & FAR ► Understanding of business model ► Outright sale – Business risk fully born by licensee ► Minimum guarantee (MG) basis – Business risk depends upon MG & commission ratio ► Pure commission basis – Business risk fully born by licensor Vital considerations - MG & commission may vary from film to film such as YRF, KJ, SRK, AK may fetch a higher MG -Higher the MG , higher the risk hence higher commission share of licensee from the balance trade proceeds -Each business model is distinctively different from each other hence may not be compared with each other July 30, 2009 Page 11 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Film Distribution – a case study ► Step 2 – Selection of Method ► CUP method could be ‘Most Appropriate Method’ (MAM) over the other methods because; ► Comparable Uncontrolled Price – Required degree of comparability is higher and availability of existing CUP ► Cost Plus – No uniform formula to compute gross margins in India, hence could not be relied upon ► Resale Price – Generally used in distribution of manufacturing good hence may not be MAM ► Profit Spilt – Only used in complex, interdependent & interlinked transactions, hence may not be MAM ► Transaction Net Margin – Segmental data may not be available due to upcoming segment, also termed as residual method Vital considerations -Generally CUP is preferred as MAM, due to high level of comparability -First preference should be given to Internal cups, as degree of comparability could be measured appropriately July 30, 2009 Page 12 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Film Distribution – a case study ► Step 3 – Selection of Comparables ► Internal CUP should be preferred ► Analysis of terms with the third parties through whom distribution was done in the same region prior to opening of an subsidiary i.e. US, UK & South Africa in the instant case ► If above not available, then analysis of existing third party comparables on the following grounds; ► Comparable business model & terms ► Comparable geographic, local business environment such as NRI & PIO population in the instant case ► External CUP may not be used, due to lack of availability of detailed information due to which conclusive comparative analysis could not be undertaken Vital considerations Higher the level of comparability, higher the accuracy of benchmarking study July 30, 2009 Page 13 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Film Distribution – a case study ► Step 3 – Selection of Comparables ► Accept / Reject Matrix Country Population of NRI & PIO’s ‘Accept / Reject analysis’ with reasons thereon USA 3,000,000 N.A. UK 1,600,000 N.A. South Africa 1,160,000 N.A. UAE 1,400,000 Accepted, because of comparable business model due to similar geographical conditions Nepal 4,000,000 Accepted, because of comparable business model due to similar geographical conditions Malaysia Certain Minimum Guarantee & Rejected, because of different business model 30% Commission Germany 80,000 Rejected, because of different geographical conditions Russia 16,000 Rejected, because of different geographical conditions France Outright Purchase Rejected, because of different business model Canada Outright Purchase Rejected, because of different business model Australia Outright Purchase Rejected, because of different business model Facts July 30, 2009 Page 14 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Film Distribution – a case study ► Step 4 – Analysis of Comparables ► Comparison on identical grounds Particulars Associated Third Party in Third Party in Nepal Enterprises UAE Terms of Arrangement 10% on net 5% on Gross 15% on net revenues revenues revenues Gross Collections of the movies (net of taxes) 100 100 100 Less: Theatre Share on the above 45 45 45 Less: Cost of prints 10 10 10 Net Collection from Film distribution 45 45 45 Less: Share of trade proceeds to on net 4.5 N. A. 6.75 collections Less: Share of trade proceeds to on Gross N. A 5 N. A Collections Net Collection received by ABC, India 40.5 40 38.25 Percentage share of trade profits given to 10% 11.11% 15% Overseas Exhibitor Arithmetic mean is (15+11.11)/2 = 13.05%, hence the existing transaction is comparable in the Indian context. July 30, 2009 Page 15 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Royalty – An analysis ► Problems faced in benchmarking analysis ► Maintenance of documentation of ‘benefits received’ from use of intangible such as trademark, brand name, patent, designs, marketing intangibles etc. ► Difficult to demonstrate the economic value of the intangible, however sometimes a report of an independent valuer could be considered ► Application of TNMM and exchange control approvals are not widely accepted by authorities in India ► Internal CUPs are only available, that to in rare cases ► Due to secrecy norms & sensitive business information, external CUPs are not available in public domain in India ► In foreign countries, the public databases are used for comparable search such as; Asia-pacific franchise directory, International Franchise Association (IFA)’s franchise opportunities directory, Franchise-Euro edition, RoyaltyStat compiled from US SEC archieve, RoyaltySource based on media reports etc. July 30, 2009 Page 16 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Royalty – An analysis ► Indian Regulatory Scenario for Royalty payment ► In the past, reference for comparable royalty rates used to be made to the website (www.siadipp.nic.in) of the Secretariat of Industrial Assistance (SIA) constituted under the Ministry of Industry and Commerce of the Government of India ► Through this website, SIA used to publish information on a monthly basis on royalty rates approved by the Government, in various technical collaboration proposals put forth by the industry for the Government's approval ► However, SIA has discontinued publishing data relating to approved royalty rates from September 2004 ► Currently prescribed ‘automatic approval route’ for Royalty payment by Department of Industrial Policy & Promotion (DIPP) is as under; ► Use of trademark - 1% on domestic sales & 2% on exports ► Use of trademark along with technology transfer - 5% on domestic sales & 8% on exports or lump sum payment up to USD 2 million ► However, there exists an ambiguity on availability of automatic approval route to service industry ► However, recently it is proposed to allow all payments for trademark, know-how, technology transfer under the ‘automatic route’ without any restrictions of DIPP July 30, 2009 Page 17 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Royalty – An analysis ► Suggested way forward ► Detailed documentation of ‘benefit received’ along with various business & commercial justifications for the payment ► Internal CUP’s & its consistency should be carefully analyzed ► ‘Holistic approach’ needs to be adopted such as consideration of; ► Tenure of the agreement ► Various benefits available to Indian company which may not be utilized by the Indian company due to its limited business capabilities ► Practice followed by its peers ► Prevailing business conditions of the industry segment ► Use of intangibles may not always/every year results into super profits ► Regulatory approvals such as DIPP, RBI should be considered especially approvals obtained other than under automatic route with specific representations before these authorities Transfer pricing incase of ‘payments for use of intangibles’ needs a special consideration both from revenue authorities as well as tax payers July 30, 2009 Page 18 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Captive Service Provider – a case study ► Facts of the case WDV Inc a US based company engaged in media & entertainment business has set up a company in India for carrying out its business support function exclusively for its parent, which is remunerated at ‘Cost plus’ ► Step 1 – Business Study & FAR Assets employed Type of Assets WDV India WDV USA Employees Yes Yes Property, Plant & Equipment Limited Yes Intangible such as Trade Licenses, Know No Yes How etc. July 30, 2009 Page 19 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Captive Service Provider – a case study ► Step 1 – Business Study & FAR Risk assumed Type of Risk WDV India WDV USA Entrepreneurship Risk No Yes Market Risk No Yes Manpower Risk Yes Yes Credit & Collection Risk No Yes General business risks Limited Yes Foreign Exchange Risk No Yes Legal Risk No Yes Vital considerations Accordingly, WDV USA should be characterized as the ‘Entrepreneur’ and WDV India as the ‘Limited Risk Bearing enterprise’ July 30, 2009 Page 20 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Captive Service Provider – a case study ► Step 2 – Selection of method ► TNMM method could be ‘Most Appropriate Method’ (MAM) over other methods because; ► Comparable Uncontrolled Price – Required degree of comparability is higher and no availability of CUP due to closely held industry ► Cost Plus – No uniform formula to compute gross margins in India, hence could not be relied upon ► Resale Price – Generally use in distribution of manufacturing good hence may not be MAM ► Profit Spilt – Only used in complex, interdependent & interlinked transactions, hence may not be MAM ► Transaction Net Margin – Comparable data is available in the public database, and also termed as residual method July 30, 2009 Page 21 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Captive Service Provider – a case study ► Step 3 – Selection of comparables ► After conducting the search on public database on the basis of various parameters such as turnover, availability of data, related party transactions, elimination of companies with abnormal results. The following are the final comparables; Sr. EBIT of EBIT of Average Company Name No. FY 20XX-XX FY 20XX-XX of 2 years 1 AL XX% XX% XX% 2 IOL XX% XX% XX% 3 TCL XX% XX% XX% Average (Arithmetic mean) XX% XX% XX% Vital considerations The prime factors distinguishing WDV from the set of comparables is that it do not undertake following risks; -Marketing functions & risk -Credit Risk July 30, 2009 Page 22 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Captive Service Provider – a case study ► Step 4 – Analysis of comparables ► Hence appropriate ‘discounting’ has to be done to the arithmetic mean in the absence of ‘marketing activity’ function by WDV India. ► Till date, only 3 judicial precedents has computed margins attributable to marketing activities, hence same may be used for discounting as under; Sr. Margin attributable marketing Particulars of Judicial decision No. Activities by judicial authorities 1 Ahmad Bhai Umar Bhai (SC), 18 ITR 472 35.00% 2 Carborandum Co. Vs CIT (SC), 108 ITR 335 10.00% 3 M/s Rolls Royce Plc, Delhi Tribunal, M.A. Nos.55 to 35.00% 66/Del/2008, ITA Nos.1496 to 1501/Del of 2007 Simple Average (Arithmetic mean) 26.67% Vital considerations Hence, arms length price could be arrived as follows; XX% - (XX*26.67%) = XX% July 30, 2009 Page 23 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Key Indian Judicial decisions July 30, 2009 Page 24 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Litigation Update… ► Skoda Auto India – Pune ITAT ► Transactions between Associated Enterprises (‘AEs’) cannot be considered for determining the existence of an internal Comparable Uncontrolled Price (‘CUP’) ► The external CUP is not the correct method when the product is unique ► Assessee cannot be expected to get details and particulars, which are not available in public domain ► Honeywell Automation – Pune ITAT ► Only current year data to be used, if the Appellant is not be able to reveal any facts to bring the case to the proviso to Rule10B(4) ► Gujarat Guardian – Delhi High Court ► The judgment tacitly endorses that companies may follow “prudent” business strategies that may result in current losses if such losses are less than the losses to be incurred had the company gone out of business July 30, 2009 Page 25 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Litigation Update… ► Coca Cola India – Punjab & Haryana High Court ► For invoking Transfer Pricing (‘TP’) regulations, there is no requirement to establish transfer of profits outside India or evasion of tax ► Permission granted by the Reserve Bank of India (‘RBI’) under the Foreign Exchange Regulation Act (‘FERA’) cannot control the provisions of the Income-tax Act, 1961 (‘the Act’) ► UCB India – Mumbai ITAT ► CUP method requires a high degree of comparability , even a minor change in the properties of the products, circumstances of trade (billing period, amount of credit therein, geographical market conditions etc.) may have a significant effect on the price ► Detailed Functions, Assets & Risks (‘FAR’) analysis required for application of CUP method July 30, 2009 Page 26 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Litigation Update… ► Sony India – Delhi ITAT ► Loss making companies cannot be excluded from the list of comparables, as incurrence of loss is a normal part of business. However, incase of consistent losses and other peculiar company specific factors, the company may not be a comparable. ► Not an easy job to evaluate the differences for each of the factors and held that the “Ad-Hoc” adjustment of 20% granted by TPO for these factors was fair and reasonable ► Schefenacker Motherson Ltd – Delhi ITAT ► Cash profit on sale or cash profits on total cost excluding depreciation can be adopted as an appropriate profit level indicator (PLI) under TNMM ► No standard concept existed for ‘operating income’, hence it would depend on facts of each case July 30, 2009 Page 27 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Litigation Update… ► The Karnataka High Court stayed the ITAT decision incase of Aztec Software & Philips Software, and admitted the appeal on the following substantial question of law : ► Whether the TP regulations cannot be invoked and applied in the case where the provisions of section 10A of the Act where income is exempt, is availed of by the Appellant? ► Whether the Appellant was justified in using earlier year data in comparability analysis? ► Whether section 92C(2) of the Act provides for a standard deduction of 5% in all TP cases? ► Whether a flat comparability adjustment for working capital and risk can be made ignoring the quality, data, purpose and reliability of adjustment? ► Whether companies with even a single rupee related party transaction should not be selected as comparables? Post the decisions of Karnataka High Court in the case of Philips Software and Aztec Software, most of the TP issues are now open for interpretation July 30, 2009 Page 28 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Recent global developments & emerging issues July 30, 2009 Page 29 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Recent global developments ► Australia Australian Tax Office (ATO) working on draft discussion paper on transfer pricing implications on ‘financing group companies’ ► China China’s State Administration of Taxation (SAT) issued detailed guidelines on transfer pricing covering various issues such as APAs, Cost sharing arrangement, Safe harbor etc ► Singapore Inland Revenue Authority of Singapore (IRAS) issued detailed draft discussion paper on transfer pricing implication on ‘related party loans’ & ‘related party services & cost sharing arrangements’ ► United States US Treasury department and Internal Revenue Services (IRS) published regulations on ‘Cost sharing arrangement (CSA)’ July 30, 2009 Page 30 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Overview and need for an APA ► The comparability of the taxpayer with uncontrolled third parties is subjective and fraught with number of assumptions ► Given the subjectivity or lack of quality data for a perfect analysis the potential risk of double taxation in case of TP adjustment, TP is an area of concern for the taxpayers ► There is a genuine desire amongst for taxpayers to comply with TP provisions of both jurisdictions that are involved in each transaction ► Therefore APAs are desired to achieve certainty in TP valuation and to avoid litigation ► Countries who have introduced concept of APA have made provision for unilateral, bilateral or multilateral APA in domestic law. They have also set up a separate authority to execute APA. Bilateral or Multilateral APA are attended by the Competent Authority under article on mutual agreement procedure in DTAA July 30, 2009 Page 31 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Countries with APA … so far ► Australia ► Mexico ► Belgium ► Netherlands ► Canada ► New Zealand ► China ► Peru ► Colombia ► Poland ► Denmark ► Singapore ► France ► Spain ► Germany ► Switzerland ► Hungary ► Taiwan ► Ireland ► Thailand ► Israel ► Turkey ► Italy ► UK ► Japan ► USA ► Kazakhstan ► Venezuela ► Korea July 30, 2009 Page 32 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Is APA successful ? ► This can be known from the status of number of APA applications filed and disposed off by the tax authorities. Given below is select country wise summary of status of APA application Name of Introduced No of APAs Information available as of country since pronounced/ operating Australia 1995 1314 30.06.2005 Canada 1994 55 From 94’ to 2003 China 1998 180 Until 2007 France 1999 30* 2004 Japan 1987 303 Till year 2004 Korea 2006 5 As per latest information available Mexico 1995 1300 As per latest information available United Kingdom 1999 300 Till 2006 USA 1991 692 Till year 2005 * Applications received The details mentioned in the table are gathered from the information available in internet. July 30, 2009 Page 33 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • APA - Conclusion ► APA definitely a tool to resolve transfer pricing, especially by use of BAPA ► Time period to conclude (normally 2-3 years) does not act as constraint, as both taxpayer as well as revenue sure of certainty in tax and APA covers several years ► Gives both taxpayer and revenue a perspective / experience on transactions where APA has not been obtained ► Transactions which are complex and difficult can be analysed more carefully during APA process, thereby giving both taxpayer and revenue to showcase their case ► Renewal of APA becomes less time consuming and definitely reduces cost and time ► Taxpayer obtaining APA lives in more certain environment then taxpayers who have not obtained APA (No hefty tax provisioning required) ► Annual Documentation cost can be substantially reduced and TP audit and penalty fear almost becomes negligible ► Lastly reduces double taxation and promotes international business July 30, 2009 Page 34 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Is it a time to introduce APA in India ? ► Currently we are in eighth year since introduction of TP in 2001 ► Information as per newspaper indicates total quantum of adjustment in 3 years of audit - approx US$ 1.5B ► A large number of cases pending at first level of appeal, indicates difficulty to adjudicate a ruling on TP matters ► Only in few cases Tribunal has pronounced its judgment ► Even in US, Courts has not been able to pronounce more than 30 cases vs 500 or more APAs ► Resolution through APA seems to have more success in countries where APAs are available – see table in previous slides ► India’s case is no different, APAs definitely helps in resolving pricing matters upfront Indian revenue authorities as well as the taxpayers are prepared for the APA regime July 30, 2009 Page 35 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Key takeaways July 30, 2009 Page 36 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Key takeaways ► Certain key points for transfer pricing audits : Detailed comparability analysis of the data is a must Peculiarity of business and prevalent business conditions should be considered Exceptional situation needs exceptional actions such as recent global downturn etc. Emphasis on detailed & in-depth FAR analysis and documentation Internal CUPs should be preferred over the external CUPs Cost-benefit analysis needs to be undertaken incase of payment of management fees, royalty & reimbursement of expenses Revenue authorities needs to come out with guidelines/safe harbor on certain key issues such as Group support services Reimbursement of expenses Cost sharing arrangement etc. Indian government should introduce APA’s which would result into Comfort to the non-resident coming into India & taxpayers Less burden on the assessing officers July 30, 2009 Page 37 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Key takeaways ► Certain key points for transfer pricing audits : Start up losses or initial low margins may be considered for ‘Full fledge manufacturer’ Multiple year data may be considered as per business cycle Use of loss making comparables may be allowed in selected cases Transfer pricing is about understanding the business & its mechanism ….. It’s the way you would have carried on your own business !!! July 30, 2009 Page 38 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Q&A July 30, 2009 Page 39 Transfer pricing in Media & Entertainment Industry For Presentation in NADT
  • Thank You For any further clarifications; Mr. Romesh S A Sankhe, E-mail - romesh.sankhe@rediffmail.com, (Cell) - +91 9892 892504. Disclaimer The views expressed in this presentation are solely that of the speaker and do not constitute any kind of professional advice. These views or opinion expressed in this presentation should not be directly applied or used without a professional advice as the review of the facts and the existing judicial position is of utmost importance in the transfer pricing analysis. July 30, 2009 Page 40 Transfer pricing in Media & Entertainment Industry For Presentation in NADT