BDO INDIA - Transfer Pricing PRISM 2017
05 January 2017
Transfer pricing continues to be the most important global tax issue today. The recommendations of the OECD’s BEPS project in October 2015 are having a real impact with respect to the documentation required to support the prices used for transactions between non-arm’s length parties, with the adoption of these recommendations by many countries around the world. In its 2016 budget, India announced to the world that it will be introducing the new transfer pricing guidelines for documentation effective for the assessment year 2017-18.
These documentation changes require a three-tier approach to transfer pricing documentation. They include a Master file with an overview of an international group’s business and transfer pricing policies, a local file which documents how the Indian entities in the group have complied with the arm’s length principle, and a Country by Country Report, that provides specific data by country. Together, this documentation will greatly increase the transparency of how a global organisation conducts its business to the Indian and other tax authorities around the globe.
With these changes, India has joined most of the rest of the world in elevating the importance of transfer pricing in combating inappropriate profit shifting between countries, by the prices charged for transactions between non-arm’s length parties of an international group.
The Indian tax authorities have always paid close attention to transfer pricing policies used by business operations in India for both international and domestic transactions between non-arm’s length parties. There are also a number of areas where the Indian tax authorities, focus which increases the transfer pricing risk for any business operating in India. It is critical that all Indian businesses pay attention to their transfer pricing policies and have sufficient documentation to support the prices used.
BDO India has again produced this comprehensive Transfer Pricing update which is an invaluable resource for both Indian businesses and foreign businesses operating in India. BDO India is one of the leading Transfer Pricing practices in India and an important part of BDO’s global Transfer Pricing team.