Thursday, May 09, 2013

Transfer pricing litigations

According to a Financial Times report by James Crabtree and Victor Mallet “Seventy per cent of all global transfer pricing litigation is in India”. Here is  Khan Academy tutorial on transfer pricing. Then there is a problem if they want to bring the money back to the parent country in which case they have to pay repatriation tax. Apparently there are ways to avoid this. One is show losses in the parent country . Another is to bring it as foreign investment; apparently Mauritius is the biggest foreign investor in India; all this is supposed to be Indian money which escaped taxes. Another way is to wait for some employment crisis and pressurize the government for repatriation tax relief to bring investment to the country. Apparently this was done in USA in 2004 without much success and there seems to be currently pressure again
 I do not know which of these or some other strategy is playing a part in the Indian litigations.

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