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‘Transfer Pricing’ - An International Taxation Issue Concerning the Balance of Interest Between the Tax Payer and Tax Administrator

Company Law Journal, Forthcoming

8 Pages Posted: 25 Aug 2009  

Sayantan Gupta

Hidayatullah National Law University, Raipur, India

Date Written: April 24, 2009

Abstract

The 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 (TP) 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 minimise such profits in high tax countries. Though the transfer pricing (TP) provisions are exhaustive in many respects and are, generally, in line with international practices prescribing methodologies, documentation requirements and penalties, they fail to provide the taxpayer the facility of obtaining Advance Pricing Agreement and do not specifically address special situations such as intangibles, e-com, global trading derivatives and so on, which require special consideration. While transfer pricing is a necessary tax provision to get our share of revenue from international transactions, it should be administered with sensitivity so as not to kill the goose that lays the golden egg!

Suggested Citation

Gupta, Sayantan, ‘Transfer Pricing’ - An International Taxation Issue Concerning the Balance of Interest Between the Tax Payer and Tax Administrator (April 24, 2009). Company Law Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1460464

Sayantan Gupta (Contact Author)

Hidayatullah National Law University, Raipur, India ( email )

Civi Lines, Raipur
Raipur
India

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