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Regarding Transfer Pricing

Tax planning 767 views 1 replies

Kamalesh Verma

Service

37 Points Joined July 2008

Hi!

can anybody suggest one of my query:

Suppose A company in india has subsidiary in Dubai. This Indian company wants to open a new subsidiary in Russia and this new company will be subsidiary of Dubai company.

My quesstion is:

what will be the transfer pricing rule for Indian company, whether it can sell goods to Dubai company at transfer pricing and that company will resell to russia at their invoice price. Ultimately Russian company is Sub-subsidiary of Indian company so will there be any charge under transfer pricing rules prevailing in India

Replies (1)

Gaurav Garg

30 Points Joined February 2010

Dear Mr.Verma,

All three companies viz. Indian Parent Company ('IPC'), Dubai Subsidiary Company ('DSC') and Russian Step Down Subsidiary ('RSDS') would be regarded as associated enterprises under section 92A(2) of the Act. However, the international transactions that falls within the purview of Chapter-X would be transaction between IPC and DSC and not transaction between DSC and RSDS.

If transfer price for goods transferred to DSC by IPC founds to be at arm's length then there should not be any issue. A robust documentation may be required to demonstrate that DSC is not used to transfer profits outside India.

If you still have some specific query, you can call me on 9899994934 or mail me at gaurav @ jgarg.com

Best Regards

CA.Gaurav Garg

JGarg Economic Advisors

New Delhi, India