Expectations from the new Government - Transfer Pricing

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Akin to the sentiments of the entire nation, the taxpayer community looks forward to the New Government with huge expectations. Considering the spate of high profile Transfer Pricing (‘TP’) adjustments and their direct impact on the confidence level of foreign investors in India; taxpayers would look forward to the following measures:
- Clarity on contentious issues like applicability of TP provisions to transactions which are per se not taxable like issue of shares by a company
- Guidance on dealing with sophisticated issues like manufacturing/marketing intangibles, location savings and intra-group services
- Wider application by introducing roll-back provisions and commitment of more resources by Revenue to the Advance Pricing Agreement program which is fast emerging as the effective option to manage dispute resolution and provide certainty to taxpayers
- Rationalization of safe harbour margins and elimination of classification of substantially similar services in separate baskets under Safe Harbour Rules
- Introduction of Risk Based Assessments system
- Reduction in compliance burden especially in cases with no tax arbitrage like application of Specified Domestic Transactions provisions to entities subject to the same tax rate
- Elimination of retrospective amendments to regulations

Indeed the expectations are not ethereal and the New Government should make every attempt to fulfill them.

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Expectations from the new Government - Transfer Pricing

  1. 1. 1 Barboza, Melvin Sent: Tuesday, January 21, 2014 10:12 AM Subject: Expectations from the new Government - Transfer Pricing Expectations from New Government - Transfer Pricing 16 May 2014 Akin to the sentiments of the entire nation, the taxpayer community looks forward to the New Government with huge expectations. Considering the spate of high profile Transfer Pricing (‘TP’) adjustments and their direct impact on the confidence level of foreign investors in India; taxpayers would look forward to the following measures:  Clarity on contentious issues like applicability of TP provisions to transactions which are per se not taxable like issue of shares by a company  Guidance on dealing with sophisticated issues like manufacturing/marketing intangibles, location savings and intra-group services  Wider application by introducing roll-back provisions and commitment of more resources by Revenue to the Advance Pricing Agreement program which is fast emerging as the effective option to manage dispute resolution and provide certainty to taxpayers  Rationalization of safe harbour margins and elimination of classification of substantially similar services in separate baskets under Safe Harbour Rules  Introduction of Risk Based Assessments system  Reduction in compliance burden especially in cases with no tax arbitrage like application of Specified Domestic Transactions provisions to entities subject to the same tax rate  Elimination of retrospective amendments to regulations Indeed the expectations are not ethereal and the New Government should make every attempt to fulfill them. Rohan Phatarphekar Head-Transfer Pricing KPMG in India © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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