70 per cent of global TP litigations emanate from India - ASSOCHAM
RADICAL changes are underway with the Direct Taxes Code likely to come into effect from next financial year (2012-13) but there is no formal mechanism for mediation under the law at present, said The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Transfer price refers to the amount used in accounting for cross-border transfer of goods or services from one responsibility centre to another or from one company to another, which belongs to the same group. It is a mechanism for distributing revenue between different divisions, which jointly develop, manufacture and market products and services.
The transfer pricing disputes in India have so far involved officers and taxpayers locking horns on complex economic concepts relating to creation of intangibles, location savings and benefits commensurate with payments. A sizeable number of disputes arise solely on the ground of comparability or benchmarking analyses.
Transfer pricing regulations should introduce the concept of multiple years data not only from the perspective of compliance but more importantly for improving the quality of comparability analyses as repeatedly voiced by the Organisation for Economic Cooperation and Development (OECD) for comparability analyses, said ASSOCHAM secretary general.
ASSOCHAM says that nearly 70 per cent of global transfer pricing litigations emanate from India.