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plaidcloud01 · 1 month ago

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Tips for Selecting the Right Intercompany Transfer Pricing Software

Managing intercompany transfer pricing is a complex but essential part of global business operations. As multinational companies navigate the intricate rules and regulations of different jurisdictions, the need for robust systems to manage these transactions has become even more critical. Intercompany Transfer Pricing Software is specifically designed to help companies manage, document, and comply with international transfer pricing regulations.

Selecting the right software can make a significant difference in streamlining processes, improving compliance, and reducing the risk of errors. With so many options available, how do you choose the best one for your business needs?

What Is Intercompany Transfer Pricing Software?

Intercompany transfer pricing software is a tool that helps businesses determine, calculate, and document the prices at which goods, services, or intellectual property are transferred between subsidiaries of the same parent company across different countries. These transactions need to be priced according to arm’s length principles, meaning they must be consistent with prices that unrelated parties would agree upon.

The software automates and simplifies the transfer pricing process, ensuring compliance with the laws and guidelines set by tax authorities worldwide. This is especially important for multinational companies that have operations in multiple countries, each with its own set of tax regulations.

Key Features to Look for in Intercompany Transfer Pricing Software

1. Compliance with Local Regulations

One of the primary reasons for using Intercompany Transfer Pricing Software is to ensure compliance with international tax laws and local regulations. Tax authorities around the world, such as the IRS in the U.S. or the OECD in Europe, require companies to document their transfer pricing policies and practices thoroughly.

Look for software that can accommodate various tax rules and provide reports that meet the specific documentation requirements of different jurisdictions. It should also allow for updates to be made quickly when regulations change.

2. Automation of Transfer Pricing Calculations

Manual transfer pricing calculations can be cumbersome and error-prone. The right software should automate the calculation process, ensuring that the prices for intercompany transactions are consistent with the arm’s length principle. It should be able to handle different pricing methods, including cost-plus pricing, resale price method, and comparable uncontrolled price method.

This automation helps reduce the risk of human error and ensures faster, more accurate compliance with international rules.

3. Integration with Existing Financial Systems

A robust Intercompany Transfer Pricing Software should integrate seamlessly with your existing financial systems, such as Enterprise Resource Planning (ERP) and accounting software. This integration ensures that the software can pull relevant financial data automatically, reducing the time and effort required to input data manually.

Additionally, the software should be able to generate comprehensive reports that can be easily shared with internal stakeholders or external auditors.

4. Scalability and Flexibility

As your company grows, your transfer pricing needs will likely become more complex. Look for software that is scalable and can handle an increase in the volume of intercompany transactions, as well as changes in the business structure.

The software should also offer flexibility in terms of customization. Your company may need specialized features for certain regions or industries, so the ability to tailor the software to suit your specific needs is crucial.

5. Real-Time Data and Reporting

Having access to real-time data and reporting is critical for making informed business decisions. Choose software that provides up-to-date information on transfer pricing policies, pricing adjustments, and relevant financial data.

The software should also allow you to generate various reports easily. These reports can be used for internal audits, compliance documentation, and tax filings, ensuring that your business remains compliant with tax authorities at all times.

Steps to Choose the Right Software

1. Identify Your Needs

Before selecting Intercompany Transfer Pricing Software, assess the size and complexity of your business. Are you dealing with multiple subsidiaries across different countries? Do you need to handle complex transfer pricing models? Understanding your specific needs will help narrow down your options.

Additionally, consider whether you need a standalone transfer pricing solution or if an integrated system that works with your existing accounting and financial tools would be more beneficial.

2. Evaluate Available Options

Research different software providers and compare their offerings. Look at reviews, ask for demonstrations, and consult other businesses in your industry to get recommendations. During the evaluation, pay attention to factors such as:

User-friendliness

Customer support

Customization options

Cost

Also, ensure that the software vendor has a proven track record and a strong support team that can help with implementation, training, and troubleshooting.

3. Consider Implementation and Support

Choosing the right software is only the first step; you need to ensure that the implementation process is smooth. Some software solutions may require significant changes to your current systems, which could result in downtime or disruptions.

Look for software that offers comprehensive training and support to make the transition as seamless as possible. The vendor should be able to provide guidance on how to integrate the software into your current systems and provide ongoing support if issues arise.

4. Assess the Long-Term Value

While it may be tempting to choose the most affordable option, remember that you’re investing in a system that will manage crucial aspects of your business. Make sure the software can grow with your company, adapt to changing regulations, and provide long-term value. The right Intercompany Transfer Pricing Software should be seen as an investment in efficiency, accuracy, and compliance.

Conclusion

Selecting the right Intercompany Transfer Pricing is essential for multinational companies that need to comply with complex international tax regulations. The right software will help automate calculations, integrate with existing systems, and ensure compliance with local and global tax rules. By evaluating your needs, comparing options, and considering the long-term value, you can choose the best software solution to support your business as it grows.

With the right software in place, you can reduce the risk of errors, save time, and improve the efficiency of your transfer pricing process—helping your business navigate the complexities of international tax laws and maintain smooth operations across all subsidiaries.

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zeynepom3r · 3 months ago

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Hey everyone,

If you’re working in international trade, taxation, or customs, you know how important it is to understand transfer pricing—especially in today’s complex global economy. That’s why I highly recommend checking out the Fundamentals of Transfer Pricing course, co-developed with the OECD, which dives deep into the intersection of transfer pricing and customs regulations. This updated course is packed with practical insights and is ideal for anyone wanting to stay ahead in international tax and trade compliance.

Why This Course is a Game-Changer:

OECD-Endorsed Content: Learn directly from the international body setting global tax guidelines.

Rules of Origin & Transfer Pricing: Master how transfer pricing relates to rules of origin in international trade, and how to ensure compliance with both tax laws and customs duties.

Arm’s Length Principle: Understand the core concept behind the arm’s length principle and how to apply it in cross-border transactions to stay compliant.

Real-World Methods: Gain hands-on knowledge of popular transfer pricing methods like the CUP method, Resale Price Method, and more, to ensure accurate pricing in global trade.

Key Takeaways:

International Tax Framework: Get a solid grasp of the OECD guidelines and tax treaties that influence global transfer pricing rules.

Comparability & Adjustments: Learn how to assess comparability in cross-border transactions and handle primary/secondary adjustments.

Dispute Avoidance: Discover effective dispute resolution mechanisms like Advance Pricing Agreements (APAs), Mutual Agreement Procedure (MAP), and Arbitration to prevent transfer pricing conflicts.

Bonus:

Practical Focus: The course offers hands-on examples to help you apply transfer pricing methods in real-world trade scenarios.

Tax & Customs Integration: Gain a comprehensive understanding of how tax treaties and customs duties interact with transfer pricing and how to navigate these challenges.

If you're involved in cross-border transactions, this course will equip you with the tools and knowledge you need to navigate complex transfer pricing and taxation issues with confidence.

For more details and to register, check out the full course here: Fundamentals of Transfer Pricing

Got any questions or thoughts on transfer pricing? Drop them in the comments—I’d love to hear your experiences!

#TransferPricing #InternationalTax #OECD #CustomsRegulations #GlobalTrade #TaxCompliance #CrossBorderTransactions #TradeCompliance #ArmLengthPrinciple #TaxTreaties #OECDGuidelines #CustomsDuties #AdvancePricingAgreements #MutualAgreementProcedure #MAP #InternationalBusiness #GlobalEconomy #TaxAndCustoms #TransferPricingMethods #GlobalTaxation #CustomsTraining #TradeTaxation

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scannerca45 · 5 months ago

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Simplifying the Complexities of Transfer Pricing for CA Students

Transfer pricing is a critical topic for Chartered Accountancy (CA) students. It plays a significant role in taxation and accounting practices, making it essential for aspiring professionals to understand its intricacies. This article aims to simplify transfer pricing concepts, helping CA students build a solid foundation for their studies and future careers.

What is Transfer Pricing?

Transfer pricing refers to the price charged for goods, services, or intellectual property transferred between associated enterprises, typically within a multinational company. The objective of transfer pricing regulations is to ensure that transactions between related entities are conducted at arm’s length—meaning the price should be comparable to what unrelated entities would charge in similar circumstances.

Importance of Transfer Pricing for CA Students

Global Relevance: Multinational corporations (MNCs) must comply with transfer pricing regulations in various jurisdictions to avoid tax evasion and double taxation.

Exam Focus: Transfer pricing is a recurring topic in CA exams, appearing in papers like taxation and international taxation.

Practical Applications: Understanding transfer pricing equips CA professionals to handle audits, compliance, and advisory roles for clients with cross-border transactions.

Key Concepts in Transfer Pricing

Arm’s Length Principle: Ensures that related parties engage in transactions as though they were independent entities.

Methods of Transfer Pricing:

Comparable Uncontrolled Price Method (CUP): Compares the price charged in a related party transaction to that in an uncontrolled transaction.

Resale Price Method: Evaluates the resale price of a product and deducts a gross margin.

Cost-Plus Method: Adds an appropriate markup to the costs incurred.

Profit Split Method: Allocates combined profits based on a pre-defined formula.

Transactional Net Margin Method (TNMM): Compares net profit margins relative to an appropriate base (e.g., sales or assets).

Documentation Requirements: Tax authorities often require detailed documentation to substantiate transfer pricing practices, including:

Functional analysis

Benchmarking studies

Comparability analysis

Penalties and Compliance: Non-compliance with transfer pricing regulations can lead to hefty penalties and reputational damage.

Tips for CA Students to Master Transfer Pricing

Study the Basics First: Start with foundational concepts to build a strong understanding of transfer pricing principles.

Use the Right Study Materials: Rely on trusted resources like CA entrance exam books and scanner CA foundation books to cover the basics effectively.

Practice with Case Studies: Case studies provide practical insights into the application of transfer pricing rules in real-world scenarios.

Leverage Scanners: Utilize scanner CA intermediate books and scanner CA final books to review past exam questions and answers.

Stay Updated: Keep track of changes in tax laws and transfer pricing regulations through official updates and industry news.

Common Challenges in Transfer Pricing

Complex Regulations: Transfer pricing rules vary across jurisdictions, making compliance challenging.

Data Availability: Finding comparable data for benchmarking is often difficult.

Evolving Standards: International guidelines, such as those issued by the OECD, are constantly evolving, requiring students to stay informed.

How Scanners Can Help

Scanners, such as CA foundation scanner, CA intermediate scanner, and CA final scanner, are invaluable for exam preparation. These resources compile past papers, frequently asked questions, and suggested answers, enabling students to:

Familiarize themselves with the exam pattern

Practice a wide range of questions

Identify key areas of focus

For topics like transfer pricing, scanners can provide clarity on complex concepts through practical examples and step-by-step solutions.

Practical Application of Transfer Pricing Knowledge

For CA students undergoing articleship, transfer pricing knowledge is essential. It enables them to:

Assist in preparing transfer pricing documentation

Conduct benchmarking studies

Analyze client transactions for compliance

Additionally, this expertise opens up career opportunities in multinational companies, consulting firms, and tax advisory roles.

Conclusion

Transfer pricing might seem complex, but with the right approach and study materials, such as CA entrance exam books and scanner CA intermediate books, students can master this crucial topic. Focus on understanding the arm’s length principle, familiarize yourself with various methods, and practice extensively with past papers. By doing so, you’ll not only excel in your exams but also build a strong foundation for your career as a Chartered Accountant.

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exp2rt · 2 years ago

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The OECD Principles on Transfer Pricing Accounting: A Comprehensive Overview

The world of international business is complex and continually evolving, particularly when it comes to taxation. As multinational enterprises (MNEs) operate across various tax jurisdictions, they often engage in transactions with their affiliated entities in other countries. Setting prices for these inter-company transactions, especially for tax purposes, has always been challenging. This is where the concept of transfer pricing accounting comes into play. The Organization for Economic Co-operation and Development (OECD) has formulated specific guidelines to ensure that transfer prices are set fairly and appropriately. This article will delve into the key principles set out by the OECD on transfer pricing.

The Arm's Length Principle

The core of the OECD's transfer pricing guidelines revolves around the Arm's Length Principle (ALP). According to this principle, the prices charged in a transaction between two related parties should be the same as if the parties were independent entities negotiating under comparable conditions. This ensures that profits are fairly allocated among the countries in which an MNE operates and that each country gets its fair share of tax revenue.

Comparability Analysis

For the ALP to be applied effectively, a comprehensive comparability analysis is necessary. This involves comparing the conditions of a controlled transaction (between related parties) with those of uncontrolled transactions (between independent entities). Factors like contractual terms, economic circumstances, and the nature of the services or goods being provided are taken into account. If significant differences exist which could materially affect the price, adjustments should be made.

Transfer Pricing Methods

The OECD guidelines recognize several methods to establish arm's length pricing. The primary methods include:

• Comparable Uncontrolled Price (CUP) method

• Resale Price Method (RPM)

• Cost Plus Method (CPM)

• Transactional Net Margin Method (TNMM)

• Profit Split Method (PSM)

While the first three are considered traditional transaction methods, the latter two are transactional profit methods. MNEs should choose the method that provides the most accurate reflection of the arm's length price in light of the specific circumstances of their transactions.

Documentation and Reporting Requirements

Transparency is crucial in transfer pricing accounting. The OECD recommends that MNEs maintain robust documentation to support the transfer prices they use. This not only ensures compliance but also helps in alleviating potential disputes with tax authorities. Documentation includes details about the group’s global business operations, the nature of its intercompany transactions, and the methods applied for pricing these transactions.

Furthermore, the OECD introduced Country-by-Country Reporting (CbCR), requiring MNEs to report annually and for each tax jurisdiction in which they do business. This provides a clear overview of where the profits, sales, and taxes are paid, thereby enhancing transparency and enabling tax authorities to assess high-level transfer pricing risks.

Dispute Resolution

Given the complexity of transfer pricing, disputes between MNEs and tax authorities can arise. The OECD guidelines recommend countries to implement measures to prevent and resolve these disagreements. Mutual Agreement Procedures (MAP) is one such approach where competent authorities from the concerned countries interact to resolve the dispute.

Transfer pricing accounting is a crucial aspect of international taxation, ensuring that profits are allocated justly among the various tax jurisdictions where an MNE operates. The OECD’s guidelines provide a robust framework to assist both MNEs and tax authorities in understanding and applying the principles appropriately. By adhering to these principles, companies can ensure compliance, minimize risks, and contribute fairly to the tax revenues of the countries in which they operate.

#Transfer Pricing Accounting

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gtptransferpricing · 4 years ago

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#transfer pricing methods oecd #Oecd Guidelines Transfer Pricing Methods

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juudgeblog · 8 years ago

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Transfer Pricing Disputes in Offshore Jurisdictions

In this article, Ambika Kajal discusses Transfer Pricing Disputes in Offshore Jurisdictions.

Transfer Pricing

The price set for a transaction within a business group (controlled transactions), i.e., between the parent company and an affiliate or between related entities within the industry group, is known as the transfer price. Transfer pricing is the most important tax dispute faced by MNCs (UNCTAD 1999). ”The problem addressed by the transfer pricing rules is the absence of market friction in transactions between controlled persons and the resulting need to verify prices in such transactions for income tax purposes and, if necessary, to adjust for that absence” (Rosenbloom 2005).

Transfer pricing is termed as the pricing of the intermediate products or services supplied by one or more related units to other entities within the same company group.

The transaction value of a good or service between related enterprises may not always reflect market values. Transfer pricing refers to the distortion between transaction values and market values (OECD 2008).

Associated Enterprise

Associated Enterprises has been described in Section 92A of the Income Tax Act. The primary criteria to determine an AE is the participation in management, control or capital (ownership) of one enterprise by another whereby the participation may be direct or indirect or through one or more intermediaries, control over the entity may be direct or indirect.

International Transaction

International Transaction has been described in Section 92B of Income Tax Act. International Transaction” means a transaction between two or more associated enterprises (AE), either or both of whom are non-residents, in the nature of lease, purchase or sale, etc., of tangible or intangible asset, or provision of services, or lending or borrowing money, or any other related transaction having an impact on the profits, income, losses or assets of such enterprises,

It shall include an arrangement or mutual agreement between two or more associated enterprises (AE) for the allocation of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises.[1]

Arm Length Principle

This valuation principle applies to commercial and financial transactions between related companies. It says that transactions should be valued as if they had been carried out between unrelated parties, each acting in his own best interest. It is a condition that the parties to a transaction are independent and on an equal footing.[2] This definition is provided in OECD, 2006, Annual Report on the OECD Guidelines for Multinational Enterprises: Conducting Business in Weak Governance Zones, OECD, Paris.

TRANSFER PRICING – METHODS

Section 92C of Income Tax Act states the methods which are to be used in the computation of Arm’s Length Price.

Rule 10C of the Indian Income Tax Rules (1962)

While selecting the appropriate method, Assessee is to give regard to the nature of transaction or series of a transaction, or

The class/classes of Associated Enterprises (AE) entering into the transaction and the functions performed by them taking into account the tangible or intangible assets employed or to be employed and risks (losses) assumed by such enterprises, or

The availability, reliability of data required for application of the method and other relevant factors as the Board may prescribe.

Methods are

Comparable Uncontrolled Price Method (CUP)

Resale Price Method (RPM)

Cost Plus Method (CPM)

Profit Split Method (PSM)

Transactional Net Margin Method (TNMM)

Any other methodology prescribed by the board.

TRANSFER PRICING DEFINED IN INDIAN LEGISLATION

The Finance Act 2001 came up with a critical introduction with effect from Assessment Year of 2002-2003, relating to detailed Transfer Pricing regulations (Section 92 to 92F of the Income Tax Act, 1961).

(CBDT) Central Board of Direct Taxes has introduced some rules (Rule 10A to 10E) which related to Transfer Pricing

Applicability

Some conditions need to be fulfilled for applicability

Firstly, There must be an international transaction.

Secondly, such international transaction must be between two or more associated enterprises, either or both of whom are non-residents.

Documentation

Return

13 Different types of documents are to be maintained. These are-

(1) Enterprise-wise documents

Detailed description of the enterprise,

Defining relationship with other associated enterprises,

Nature of business carried out.

(2) Transaction-specific documents

Substantial information regarding each transaction,

Description of the functions performed by each party,

Assets employed and risks assumed by each party involved in the transaction,

Economic & Market Analysis etc.

(3) Computation related documents

Describe in details the method considered for calculation,

Actual working assumptions, concerning policies, etc.,

Adjustment made to transfer price,

Any other relevant data, documents relied upon for determination of arm’s Length price, etc.

A report from a Chartered Accountant in the prescribed form giving details of transactions is required to be submitted within a specific time limit.

PROVISIONS RELATED TO TRANSFER PRICING IN DIFFERENT COUNTRIES

USA

Legal Position

Internal Revenue Services, Internal Revenue Code 482, 6038A, 6038C, 6062(e)-(n)

Pricing Method Allowed

Best Method among CUP, Resale Price, Cost Plus, CPM, Profit Split

Documentation

Return

A tax payer is required to maintain extensive contemporaneous documentation.

Returns in Forms 5471 and 5472 have to be filed.

Penalty

20% and 40% penalty for underpayment of tax is levied.

United Kingdom

Legal Position

Schedule 28AA mentioned in the Income and Corporation Taxes Act, 1988 and Section 12B of the Taxes Management Act 1970 guide transfer pricing in the UK. Inland Revenue Department manages the affairs. Guidance Notes in Inland Revenue Tax Bulletin 37 & 38 have also been published in public.

Applicability

It relates to transactions made between a UK body corporate and another body corporate, partnership or unit trust under common control, in a transaction or some transactions. Where the parties are not under common control, Schedule 28AA may still apply as between a Joint Stock Company and one or both of two 40% shareholders.

Pricing Method Allowed

Most reasonable methods like CUP, Resale Price, Cost Plus, Profit Split, TNMM is used for computation. Preference is given to Transaction based method over profit-based method.

Documentation

Return

Contemporaneous documentation is needed. The tax payer should keep all such records as may be required for the sole purpose of helping him to make and deliver a correct and complete tax return. The absence of it is tantamount to negligence, exposing the tax payer to substantial penalties.

Apart from Annual Return showing compliance with any APA, no other return is required to be submitted.

Penalty

Up to 100% of any additional tax due as a result of transfer pricing adjustment where the tax payer is negligent.

LEGAL PROCEDURE FOR TRANSFER PRICING DISPUTES SETTLEMENT

The Central Board Of Direct Taxes published certain guidelines in 2015 to the income tax authorities in link with the Transfer pricing regulations.

After the permission of the commissioner is granted, the assessing officer has the power to refer any transaction (whether international or domestic) in the previous year to the transfer pricing officer (TPO), to calculate the arm’s length price of such the transaction.

After examining the evidence and taking into account all relevant data at his disposal, the TPO shall pass an order concerning the arm’s length principle (ALP) in the domestic or international transaction in question.

On receipt of the statement from transfer pricing officer, the AO (assessing officer) computes the total income of the assessee after taking into consideration the ALP so determined by the transfer pricing and prepares a draft order which is sent to the assessee.

Now the assessee has to either obey or objection to the draft order within 30 days of having received the draft order of the assessing officer.

Following the receipt of the reply(acceptance or rejection) of the assessee, the AO passes a final order within 30 days.

Subsequently, appeals against the AO order can be made in the appellate forums beginning with the hierarchy of Commissioner of Income Tax (Appeals) [CIT(A)], then Income Tax Appellate Tribunal (ITAT), ultimately High Court and Supreme Court, the guardian.

Dispute Resolution Panel

During earlier times, if the assessee wanted to object the assessment order, he had the only one option to approach the Commissioner of Income Tax Appeal.

After the establishment of Dispute Resolution Panel (DRP), the assessee has an additional option to approach DRP against the Draft Order issued. Finance Act introduced DRP mechanism, in 2009, as an alternative option to first appellate authority (Commissioner of Income-tax (Appeals) [CIT(A)]).

The purpose of introduction of mechanism was speedy disposal of pending disputes and to promote the growth of foreign investment. It has collegium consisting of three Commissioners of Income-tax constituted by the CBDT for meeting the purpose.

After receiving the objections from assessee, the DRP conducts hearings and passes a direction to the AO within nine months who, in turn, pass the final order within one month as per the directions of the DRP.

If an assessee is not satisfied or contented with the order of DRP, he can then appeal to the appellate authorities like the income tax appellate tribunal -ITAT, High Court and Supreme Court.

Case analysis on

Bharti Airtel Limited vs. ACIT (ITAT Delhi)

ISSUE: Whether a transaction about corporate guarantee which does not result in any profits, incomes, losses of the enterprise can come under the ambit of an ‘international transaction’ u/s 92B(1) and is subject to transfer pricing?

Bharati airtel issued a corporate guarantee to Deutsche Bank in place of its associated enterprise (AE), Bharti Airtel (Lanka). The guarantee was for repayment of the working capital facility. The assessee claimed that since it didn’t bear any cost on the issuance of such guarantee, and such guarantee was given as a part of the shareholder activity. Therefore, no transfer pricing adjustment can be made.

The TPO gave the view that as the enterprise had benefited, the ALP has to be calculated with the help of CUP method at a commission income of 2.68% plus a markup of 200 bp. The DRP upheld this by relying heavily on the retrospective amendment to s. 92B which specifically included guarantees in the definition of “international transaction.” Assessee appealed to the Tribunal which HELD:

(i) An assessee company extends assistance to the AE, which does not cost anything to the parent company. Also, particularly for which the company would not have been able to realize money by giving it to some other entity during the regular business, such assistance does not lead to any fluctuation of its profits, income, losses. Therefore, it is not covered by the definition of international transaction u/s 92B (1).

VODAFONE CASE (INDIA) (Call options case)

The case revolved around the sale of the call centre business of Vodafone, to Hutchison. Whereas, the tax agencies demanded capital gain tax for the said transaction.

In this transfer pricing case, Vodafone contended in the Bombay High Court that the Income Tax Department had no jurisdiction because the said transaction was not an international transaction and thus, did not attract any tax.

JUDGEMENT: The High Court gave judgment in favour of Vodafone company. The court reversed the decision of the tax tribunal that the recasting of the framework agreement between the taxpayer and Indian business partners was to be treated as a transfer of call options by the assessee to its Parent entity or unit merely because the latter was a confirming party.

Vodafone India Services (P) Ltd. v Union of India (issues of shares case)

The facts of Case – Vodafone India issued equity share to Vodafone Holding (Outside India) at a premium, and the same is mentioned in 3CEB in tax audit report.

JUDGEMENT: The Bombay High Court gave judgement in favor of Vodafone in accord with the petitioner’s submissions and held that issue of shares to holding company is a capital receipt and does not come under the ambit of the word ‘income’ under the act.

Maruti Suzuki Ltd v Commissioner of Income Tax [2016]

HELD: Delhi High Court stated that AMP expenses incurred cannot be framed and categorized as an international transaction under the Indian transfer pricing rules and regulations, unless the revenue can establish that the AMP spend was dictated by the foreign associated enterprise, for and on its behalf. The High Court rejected the submission of the revenue department that the mere fact of incurring AMP expenses should be considered as an inference of the existence of an international transaction.

First Blue Home Finance Ltd. v. ACIT

HELD: If an international transaction of capital nature doesn’t lead to the generation of any income itself, but the resultant transaction has an impact on the income of the taxpayer. And, if is not at arm’s length, it would invoke the provisions of chapter X and will have to satisfy the provisions of Chapter X of the Income Tax Act. If provisions are not satisfied, it will attract penalty concerning transfer pricing.

ESSAR GROUP CASE (INDIA – 2014)

ISSUE: Whether the transfer pricing provisions apply to the issue of shares.

HELD: The court held that the provisions do not apply to the issuance of shares. Vodafone case relied heavily for judgment.

Shell case (Royal Dutch Shell Group) (INDIA)

CONTENTION OF SHELL COMPANY: Equity infusion by a foreign parent company into an Indian subsidiary or enterprise cannot be taxed under the head of ” income ”.

Shell India also objected that the transfer pricing decision of tax authorities had its basis on an incorrect interpretation of the tax rules and regulations and was bad in law because the international transaction was a capital receipt on which income tax cannot be implicated.

JUDGEMENT: The Bombay High Court decided in favor of Shell India. It supplemented the principle that no income tax liability can be put on a foreign parent company’s funding of a local subsidiary through the issue of shares.

The honourable court set aside the transfer pricing adjustment of ₹17,920 crore.

The High Court rulings of VODAFONE and SHELL rest the tax controversy around capital infusion by foreign parents into their Indian enterprises.

TRANSFER PRICING DISPUTES IN OTHER COUNTRIES

All cases of foreign courts give us a glimpse of how law concerning a legal topic is applied whether strictly or liberally. These judgments have persuasive values for Indian courts. The example of a few landmark cases are given below:

AMAZON CASE (USA) (Transferring of intangibles and other issues)

FACTS

Amazon US transferred the following intangible assets: software and other technology needed to operate Amazon’s European websites, marketing intangibles, such as trademarks, trade names, and domain names and customer lists and other information concerning the Amazon’s European customers.

The Luxembourg subsidiary or enterprise made buy-in payments to Amazon of millions over seven years in exchange for the use of the intangibles. The subsidiary was also told to make annual cost-sharing payments for compensating Amazon. The amount was utilized for ongoing intangible developmental costs.

To determine the buy-in amount, Amazon preferred the comparable uncontrolled transaction (CUT) method for valuing each group separately.

The IRS contended that the buy-in payment was not arm’s length. Tax agency applied a DCF methodology to the expected cash flows from the European business to arrive at its valuation.

JUDGEMENT

Amazon.com Inc won a US Tax Court case, fending off IRS transfer pricing adjustments relating to a cost-sharing agreement (CSA) buy-in payment. The transfer pricing adjustments would have substantially increased the amazon’s taxable income by more than a billion in 2005 and 2006.

Following the similar ratio dictated in the case of Veritas Software Corp. v. Commissioner, 133 T.C. 297.

Taking the Side of Amazon, the Tax Court rejected the IRS’s recalculation, terming it as arbitrary, and unreasonable. The court said that the CUT method, used by Amazon, was the best method to calculate the CSA buy-in payment.

EATON CORPORATION & SUBSIDIARIES V. COMMISSIONER, (T.C.) (2017)

HELD

US tax court held that IRS, revenue department abused its discretion in cancelling two unilateral Advanced Pricing Agreements (APAs) between Eaton Us subsidiaries and foreign subsidiaries. APAs were related to intangible assets etc.

The court was of the view that APA revocation or cancellation must be rare. It must be the last step taken. APA is a nonadversarial method against the traditional one. It aims at reaching peaceful consensus regarding the proposed set of transactions. It gives time to the parties to meticulously set the terms and conditions in abidance of law. Only 11 APA has been revoked from 1995 till 2015.

The importance of APA must be realized in solving complex pricing transfers. APA must be encouraged as an alternative to solve possible transfer pricing disputes. IRS must not abuse its discretion. Also, Court held that APA cannot be reviewed by Law of Contract principles.

CHEVRON CASE (AUSTRALIA TAKING A STRICTER VIEW REGARDING INTER COMPANY LOANS)

A credit facility, established in 2003, Chevron’s unit in Australia paid an interest of 9 % to another subsidiary that put to use the group’s investment grade credit rating to take a loan in the US at 1.2%. This led to hefty profits for the subsidiary of A$1.1bn between 2004 to 2008, which were not taxed in both the countries (Australia or the US).

The Australian Tax Office argued that the terms and conditions of this loan allowed Chevron to claim excessive interest deductions which led to a reduction in its tax bill in Australia.

JUDGEMENT: Chevron lost the landmark case, and Federal Court ruled in favour of the Australian Taxation Offices. The tax agency had claimed that the US energy group owed A$340m ($256m) in tax, penalties, and interest, as a result of an inter-company loan to finance a massive gas project off the coast of Western Australia.

The Chevron litigation amplifies an intensifying crackdown on corporate tax avoidance.

CHANGES BROUGHT TO ENSURE REDUCTION IN NUMBER OF TRANSFER PRICING DISPUTES

India has introduced new rules that aim to provide certainty to multinationals further and reducing transfer pricing litigation.

(CBDT) Central Board of Direct Taxes revamped the rules called the safe harbour rules, introduced in 2013, under which income tax authorities do not put up a question mark on the pricing of dealing between international multinational parent companies and a related party such as their subsidiaries.

Tax experts say changes are in line with the Multilateral Convention of Base Erosion and Profit Shifting (BEPS). India has taken up the principles for acceptability of management fee from BEPS Action 10, and even though India has not yet adopted the BEPS Action 10 report about low value added service charges, it has partly aligned itself to the report tabled by the Organisation for Economic Cooperation and Development.

ADVANTAGES OF THE SAID RULES

To reduce transfer pricing disputes

To provide certainty to taxpayers,

Safe harbour margins with industry standards and

To enlarge the scope of safe harbour transactions

ADVANCED PRICING AGREEMENT (SECTION 92CC)

APA programs are structured so that the taxpayers can willingly pre determine the possible TP disputes in an honorable and stable manner, as an optional means to the traditional assessment process preferred by tax authorities.

An APA supplements the taxpayers with greater confidence concerning their TP methods. The basic foundation laid down for APA is to support ethical resolution of transfer pricing issues before positions become well-established. APAs can be one-sided, two-sided, or bilateral.

As long as the taxpayer does not breach the terms and the conditions laid down in the APA, the concerned tax authorities do not scrutinize the enclosed transactions of the said agreement.

ADVANTAGES OF APA IN THE PRESENT SCENARIO

It is a profitable thing to acquire an APA. APAs provide better assurance on the transfer pricing method. As an effect, they provide some relaxation from the possibility of risk and APA assists the financial reporting of possible tax liabilities.

APAs also considerably lessen the incidences of double taxation and costs associated with audit defence and TP documentation preparation.

PENALTIES

The provisions related to the transfer pricing matters in the Income-tax Act, 1961 are mentioned hereunder :

The penalty for failure in keeping and maintaining the required information and document in respect of the ” international transaction”.

271AA: If any person does not keep and maintain any such concerned information and document as required by section 92D(Sub-section 1 or sub-section 2), he is liable to pay the penalty.

The Assessing Officer or the Appeals Commissioner may order the person who entered into the international transactions, to pay a sum equal to the 2% of the value of each such transaction.

The penalty for failure to furnish information or document under subsection 3 of section 92D.

271G: If a person who has taken part in an international transaction and fails to provide any such information or document concerning the said transaction, as required by sub-section (3) of section 92D, he has to pay a hefty penalty.

The Officer or the Appeals Commissioner may direct that such person shall pay a sum equal to 2 % of the value of the international transaction for each such failure of producing the document.

The penalty for not furnishing a report under section 92E :

271BA: If any person fails to present a report from a chartered accountant as mentioned in section 92E, the Assessing Officer may order that such person shall pay a sum of one lakh rupees.

Tax authorities can levy stringent penalties in India and taxpayer can avoid them by proper planning and also avoid greater tax risk.

CONCLUSION

Countries are signing agreements to come up with more uniform standards of transfer pricing. Transfer pricing is a way of avoiding tax which is practiced by most of the big companies. Transfer pricing needs more stringent rules and even stricter authorities to keep a check o companies inflating the bills and getting out of the clutches of the legal system.

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[2] http://ift.tt/2csUmDy (Last Visited : 30th August, 2017)

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loyallogic · 8 years ago

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Transfer Pricing Disputes in Offshore Jurisdictions

In this article, Ambika Kajal discusses Transfer Pricing Disputes in Offshore Jurisdictions.

Transfer Pricing

Transfer pricing is termed as the pricing of the intermediate products or services supplied by one or more related units to other entities within the same company group.

Associated Enterprise

International Transaction

Arm Length Principle

TRANSFER PRICING – METHODS

Section 92C of Income Tax Act states the methods which are to be used in the computation of Arm’s Length Price.

Rule 10C of the Indian Income Tax Rules (1962)

While selecting the appropriate method, Assessee is to give regard to the nature of transaction or series of a transaction, or

The availability, reliability of data required for application of the method and other relevant factors as the Board may prescribe.

Methods are

Comparable Uncontrolled Price Method (CUP)

Resale Price Method (RPM)

Cost Plus Method (CPM)

Profit Split Method (PSM)

Transactional Net Margin Method (TNMM)

Any other methodology prescribed by the board.

TRANSFER PRICING DEFINED IN INDIAN LEGISLATION

(CBDT) Central Board of Direct Taxes has introduced some rules (Rule 10A to 10E) which related to Transfer Pricing

Applicability

Some conditions need to be fulfilled for applicability

Firstly, There must be an international transaction.

Secondly, such international transaction must be between two or more associated enterprises, either or both of whom are non-residents.

Documentation

Return

13 Different types of documents are to be maintained. These are-

(1) Enterprise-wise documents

Detailed description of the enterprise,

Defining relationship with other associated enterprises,

Nature of business carried out.

(2) Transaction-specific documents

Substantial information regarding each transaction,

Description of the functions performed by each party,

Assets employed and risks assumed by each party involved in the transaction,

Economic & Market Analysis etc.

(3) Computation related documents

Describe in details the method considered for calculation,

Actual working assumptions, concerning policies, etc.,

Adjustment made to transfer price,

Any other relevant data, documents relied upon for determination of arm’s Length price, etc.

A report from a Chartered Accountant in the prescribed form giving details of transactions is required to be submitted within a specific time limit.

PROVISIONS RELATED TO TRANSFER PRICING IN DIFFERENT COUNTRIES

USA

Legal Position

Internal Revenue Services, Internal Revenue Code 482, 6038A, 6038C, 6062(e)-(n)

Pricing Method Allowed

Best Method among CUP, Resale Price, Cost Plus, CPM, Profit Split

Documentation

Return

A tax payer is required to maintain extensive contemporaneous documentation.

Returns in Forms 5471 and 5472 have to be filed.

Penalty

20% and 40% penalty for underpayment of tax is levied.

United Kingdom

Legal Position

Applicability

Pricing Method Allowed

Most reasonable methods like CUP, Resale Price, Cost Plus, Profit Split, TNMM is used for computation. Preference is given to Transaction based method over profit-based method.

Documentation

Return

Apart from Annual Return showing compliance with any APA, no other return is required to be submitted.

Penalty

Up to 100% of any additional tax due as a result of transfer pricing adjustment where the tax payer is negligent.

LEGAL PROCEDURE FOR TRANSFER PRICING DISPUTES SETTLEMENT

The Central Board Of Direct Taxes published certain guidelines in 2015 to the income tax authorities in link with the Transfer pricing regulations.

Now the assessee has to either obey or objection to the draft order within 30 days of having received the draft order of the assessing officer.

Following the receipt of the reply(acceptance or rejection) of the assessee, the AO passes a final order within 30 days.

Dispute Resolution Panel

During earlier times, if the assessee wanted to object the assessment order, he had the only one option to approach the Commissioner of Income Tax Appeal.

If an assessee is not satisfied or contented with the order of DRP, he can then appeal to the appellate authorities like the income tax appellate tribunal -ITAT, High Court and Supreme Court.

Case analysis on

Bharti Airtel Limited vs. ACIT (ITAT Delhi)

VODAFONE CASE (INDIA) (Call options case)

The case revolved around the sale of the call centre business of Vodafone, to Hutchison. Whereas, the tax agencies demanded capital gain tax for the said transaction.

Vodafone India Services (P) Ltd. v Union of India (issues of shares case)

The facts of Case – Vodafone India issued equity share to Vodafone Holding (Outside India) at a premium, and the same is mentioned in 3CEB in tax audit report.

Maruti Suzuki Ltd v Commissioner of Income Tax [2016]

First Blue Home Finance Ltd. v. ACIT

ESSAR GROUP CASE (INDIA – 2014)

ISSUE: Whether the transfer pricing provisions apply to the issue of shares.

HELD: The court held that the provisions do not apply to the issuance of shares. Vodafone case relied heavily for judgment.

Shell case (Royal Dutch Shell Group) (INDIA)

CONTENTION OF SHELL COMPANY: Equity infusion by a foreign parent company into an Indian subsidiary or enterprise cannot be taxed under the head of ” income ”.

The honourable court set aside the transfer pricing adjustment of ₹17,920 crore.

The High Court rulings of VODAFONE and SHELL rest the tax controversy around capital infusion by foreign parents into their Indian enterprises.

TRANSFER PRICING DISPUTES IN OTHER COUNTRIES

AMAZON CASE (USA) (Transferring of intangibles and other issues)

FACTS

To determine the buy-in amount, Amazon preferred the comparable uncontrolled transaction (CUT) method for valuing each group separately.

The IRS contended that the buy-in payment was not arm’s length. Tax agency applied a DCF methodology to the expected cash flows from the European business to arrive at its valuation.

JUDGEMENT

Following the similar ratio dictated in the case of Veritas Software Corp. v. Commissioner, 133 T.C. 297.

EATON CORPORATION & SUBSIDIARIES V. COMMISSIONER, (T.C.) (2017)

HELD

CHEVRON CASE (AUSTRALIA TAKING A STRICTER VIEW REGARDING INTER COMPANY LOANS)

The Australian Tax Office argued that the terms and conditions of this loan allowed Chevron to claim excessive interest deductions which led to a reduction in its tax bill in Australia.

The Chevron litigation amplifies an intensifying crackdown on corporate tax avoidance.

CHANGES BROUGHT TO ENSURE REDUCTION IN NUMBER OF TRANSFER PRICING DISPUTES

India has introduced new rules that aim to provide certainty to multinationals further and reducing transfer pricing litigation.

ADVANTAGES OF THE SAID RULES

To reduce transfer pricing disputes

To provide certainty to taxpayers,

Safe harbour margins with industry standards and

To enlarge the scope of safe harbour transactions

ADVANCED PRICING AGREEMENT (SECTION 92CC)

As long as the taxpayer does not breach the terms and the conditions laid down in the APA, the concerned tax authorities do not scrutinize the enclosed transactions of the said agreement.

ADVANTAGES OF APA IN THE PRESENT SCENARIO

APAs also considerably lessen the incidences of double taxation and costs associated with audit defence and TP documentation preparation.

PENALTIES

The provisions related to the transfer pricing matters in the Income-tax Act, 1961 are mentioned hereunder :

The penalty for failure in keeping and maintaining the required information and document in respect of the ” international transaction”.

271AA: If any person does not keep and maintain any such concerned information and document as required by section 92D(Sub-section 1 or sub-section 2), he is liable to pay the penalty.

The Assessing Officer or the Appeals Commissioner may order the person who entered into the international transactions, to pay a sum equal to the 2% of the value of each such transaction.

The penalty for failure to furnish information or document under subsection 3 of section 92D.

The Officer or the Appeals Commissioner may direct that such person shall pay a sum equal to 2 % of the value of the international transaction for each such failure of producing the document.

The penalty for not furnishing a report under section 92E :

271BA: If any person fails to present a report from a chartered accountant as mentioned in section 92E, the Assessing Officer may order that such person shall pay a sum of one lakh rupees.

Tax authorities can levy stringent penalties in India and taxpayer can avoid them by proper planning and also avoid greater tax risk.

CONCLUSION

[1] http://ift.tt/2ArBuOM (Last visited:30th August, 2017)

[2] http://ift.tt/2csUmDy (Last Visited : 30th August, 2017)

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postolo · 7 years ago

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Tax dodgers to come clean—Government collaborates with Larsen & Toubro Infotech

Introduction

Since the beginning of Modi’s term, the Government has tried the best to match its agenda to nail black money and tax evasion. Taxation rules have also drastically changed in the last few years to fuel the tax yielding process. While the Indian economy is among the fastest developing on the planet, revenues generated for Government are not keeping pace leading to a bulge in the budget deficit. With an attempt to build a transparent system of taxation and to generate revenues to finance government expenditure, multiple strategies and plans were formulated. In April 2016, a tax amnesty scheme was composed for voluntary revelation of undisclosed income and property for the Indian residents. In June 2016, Swiss Government assured to cooperate with Indian Government in bringing back the illicit funds stashed in Swiss Banks. In November 2016, Modi government demonetised the highest currency notes pushing the Indian economy to the edge of liquidity crisis but with intent to expand tax base and push digitalisation. In September 2017, Central Board of Direct Taxes signed two advance pricing agreements (APA) with an objective to avoid double taxation and ensure certainty in transfer pricing between enterprises.

Government gave a number of chances to tax evaders and money launderers to abide by the rules before taking any acute ste6p. The countrymen were urged to get rid of the baggage of not disclosing all the tax related information to the Government for once and for all. The most recent endeavour taken to fight tax fraud, evasion and avoidance was done in October 2017. The Government announced its collaboration with Larsen & Toubro Infotech (LTI) to use advance data analytic technology to build a network and boost voluntary tax compliance by collecting data from social media accounts of taxpayers. The clustered data will be further analysed and utilised for tax governance. In times to come, the pace and size of data collection, analysis and disclosure will only proliferate as it is the underpinning of the new age digital tax system. This digital deal will pin down the tax evaders and push the envelope to what may be a one of its kind public-private partnership. The transition to the new digital world and analytics technology is loaded with glitches as the tools and methods developed for it are at a nascent stage. However, with internet, social media and big data changing the picture so rapidly, tax system must come attune with it.

Government’s initiative to fight tax fraud and evasion

The 2016 Income Declaration Scheme[1] was a golden offer to every resident to come clean about their real income. It clearly laid down the process of determining fair market value of undisclosed assets and how unaccounted money will be taxed.[2] Reasonable discounts were assured on interest and penalties over the revealed income and assets. The Government extended the date for declaration till 30-9-2016 and marked it as the ultimatum beyond which serious steps would be taken against tax evaders. A scheme to disclose the foreign assets was also introduced. However, both the schemes did not turn out to be as successful as anticipated.

Later, in June 2016, Switzerland also assured to cooperate with the Indian tax authorities to address issue of black money stashed in Swiss Banks which should be accounted for tax purposes in India.[3] Both the countries have joined their hands to combat black money by sharing the responsibilities. However, no figure has been suggested on amount of money that can be expected to be recovered from Swiss Banks. In June 2017, Switzerland ratified Automatic exchange of information (AEOI) with more than 35 other jurisdictions including India.[4] AEOI is a global standard to reduce possibility for tax evasion as envisaged by Organisation for Economic Cooperation and Development (OECD). Exchange of information pertaining to tax among different jurisdiction is governed by Common Reporting Standards (CRS) as adopted by OECD Council in July 2014.[5] The AEOI must assure reciprocity and can be legally executed through a bilateral treaty or by means of the Multilateral Competent Authority Agreement (MCAA) between the participating countries. As participating jurisdictions, Switzerland and India can exchange financial data of suspected black money holders based on the MCAA from 2019. Swiss Federal Council is currently contemplating about the time, manner and process of exchange of data on automatic basis. This kind of global level playing is necessary to put up a strong fight against tax dodgers.

With a view to exchange data with different nations and to implement AEOI standards in India, requisite legislative changes have been made through Finance (No. 2) Act, 2014 (amendment in Section 285-BA of Income Tax Act, 1961).[6] Essential rules, amendments and guidelines are being framed for smooth execution of the new global tax standards. When AEOI is fully put into effect, it would empower India to get data from practically every nation on the planet including offshore tax havens and financial hubs. This would be a commendable way to counteract global tax avoidance and evasion and will help the Government in managing with many related issues also.

In November 2016, Modi’s administration demonetised the major currency and drew out 87% of cash in circulation. Even though, its objective was to promote digitalisation, curb black money and increase the tax base, it pushed the Indian economy to the rim of liquidity crisis. Recent reports from Income Tax Department have stated that there has been a growth in the number of tax payers in 2016-2017.[7] The reason for rise in tax base cannot be comprehended clearly until this shift sustains for some more years.

In June 2017, RBI’s annual report[8] stated that 99% of banned notes were exchanged for new currency which nullified the purpose of taking the high value currency notes out of circulation. The impact of such a move has surfaced to have contributed nothing towards fighting black money and tax frauds. Post demonetisation, about 37,000 shell companies and 3,00,000 firms that were under the radar have been suspected to be indulged in tax evasions and illegal transactions.[9] But no stringent action against the suspicious dealings of black money hoarders and tax defaulters has been taken.

In September 2017, Central Board of Direct Taxes (CBDT) signed two advance pricing agreements (APA) with Indian taxpayers relating to automobile and healthcare consulting sectors.[10] It is done with the objective of reducing litigation, avoiding double taxation and ensuring certainty in transfer pricing. For a maximum period of five consecutive years, APA endeavours to specify methods of prices which will help to determine the arm’s length price (ALP) on international transactions in advance. The concept of APA phased out through the Finance Act, 2012 under which competent taxing authority would negotiate about how much profit will be taxable in their respective countries to avoid the drawbacks of transfer pricing within an enterprise. To bring tax certainty within India, Government signed 5 unilateral APAs with multinational enterprises for the covered international transaction. The agreement was relating to different sectors such as telecommunications, financial services, pharmaceuticals, etc. and has brought more revenue to tax authorities in India.[11] However, all of this was just the beginning to a journey towards sweeping tax reforms.

Using data analytics to ensure tax compliance

In comparison to our counterparts, India has the lowest tax to GDP ratios and to fix that, Government endeavours to utilise the digital technology to shore up tax collections. In October 2017, the Government proposed to collect information pertaining to income not only from traditional sources such as Banks but also from social media websites. They would amass and monitor the data posted on the social media to match it with resident’s spending pattern and income statements. Without raiding offices and houses, the officials would be able to spot the people who are not paying adequate taxes.

Developed by LTI and set up over more than seven years at a cost of around 10 billion rupees ($156 million), “Project Insight” will supplement the world’s biggest biometric identity database and policy-makers to get more individuals to pay up. It is a computerisation of all databases having immense coordinating and extensive searching capacities. The project includes making a “semantic web” where website pages are organised and labelled in such a way that it can be directly read by computers. It would create a systematic web on a taxable person with the purpose of accumulating data on all his financial activities.[12]

In this multiyear public-private partnership (PPP), LTI would operate on a build-own-operate-transfer (BOOT) model. This would imply that while it will run the project and make revenues during the agreement period, it will eventually transfer the digital system to the Government. Though, the time span of the contract has not been determined yet. The contract includes sharing of high cost resources, operations, hardware optimisation and planning from both ends. LTI has been investing constantly on developing advanced digital technologies and with the change in working model, the digital space will only get better.

The contract will roll out in phases. At first, all existing information including credit card expenditures, property and shares investment, cash inflows and outflows, deposits, etc. will be relocated to the new framework and a central team will use postal or e-mail communication to nudge assesses to file tax statements and make income declarations. There would be no physical interaction here. In the second stage which will roll out in December 2017, data analytics will be put to use to mine, clean and process the data. A separate spending profile will be created for each individual and inquiries will be more focused on the data procured. In the last stage, which will go live around May 2018, the information collected from this system will be propelled to anticipate future defaults and risks. Until a final system is decided upon, changes in a series of phases are expected. This will allow the change costs to be spread out chronologically and as a result any problems discovered will be limited in their impact. However, the scope of the project may be questioned on the grounds of privacy after the Supreme Court has ruled it to be our fundamental right.

Use of taxation technology in the international counterparts

The OECD contemplated 21 nations[13] that utilise technology to identify tax avoidance and evasion and observed that while these tools ensure tax compliance and boost income, they must be supported by policy measures and taxpayers deliberation. Nations including Belgium, Canada and Australia are utilising big data to uncover tax avoidance that may have gone unrevealed due to various reasons. Belgium is using web scrapping to extract digital data of the current taxpayers to create a huge database. After collecting data from internet scrapping and other analytical tools, the regulatory authorities conduct some standard checks to review the compiled information. Austria also monitors tax compliance by the use of web data extraction from various open source websites. Similarly, Japan collates all the data about suspected individuals and companies from different websites and compares it with the data available with the revenue agency. These technology tools have solved the problem of under-reporting of income and also created a deterrent effect necessary for continued compliance.[14]

India’s ambitious endeavours are similar to United Kingdom’s project “Connect”, which is evaluated to cost approximately 100 million pounds. Connect has proved to be one of the best big data projects owing to its three distinct features: uniform data collection, analysis and well-organised storage system. Since its commencement in 2010, it has curbed the loss of 4.1 billion pounds ($5.4 billion) in income as per December report of Institute of Financial Accountants.[15] Keeping a check on the day-to-day activities of assesses will include tracking on online transactions, travel information, etc. Investigation can be further made quickly by any authority. For instance, someone owns expensive cars and uploads information about the same on his social media account. But if the financial statements reported by him exhibit a low income, then Her Majesty’s Revenue and Customs (HMRC) will look into the affairs of such a taxpayer. HMRC also has the power to request a third party such as insurance companies, doctors, hospitals, etc. to find out about the affairs of a taxpayer. This technology would be an additional tool in the hands of administrators to be utilised for tax forecasting as well. These analytics could demonstrate how much business has drooped in a specific town following a particular event, which would enable authorities to better survey the requirements and anticipate local incomes and plan accounts.

In a country like India, where the registered taxpayers are 2.79 crores in number[16], a system that can manage large information is much needed. Use of Information and Communication Technology (ICT) by countries like Australia, Japan, and Singapore, etc.[17] has proved to be of vital importance to manage large databases pertaining to taxpayers. This technology can be applied in Indian scenario to combine social media services and to make online tax filing and payment process trouble free. It can also assist in administration of taxes, from account management to tax collection, internal management processes, consultation and verification. Introducing such a technology can also promote virtual interaction between taxpayers and revenue authorities and bring down the administrative as well as compliance cost borne by respective parties. This would decrease the chances of errors and will help the taxpayers to fulfil their tax obligations with an ease.

Conclusion and recommendations

With the increase in private sector participation, LTI has been in the vanguard of development with the Indian Government. With this partnership, it continues to be at the forefront of change. This innovative and radical step towards sustainable tax system will make acquisition, combining, and storage of taxation data easier. The tax database management system will also assist in faster processing, quick refunds and security. Once the undeclared income is brought back to the mainstream economy, it will generate revenue to finance government expenditure and eventually, there is a possibility that everything will go digital for tax system.

Recently in August 2017, the Government laid down the deadline to link PAN cards with biometric identifier, Aadhaar. With all the anti-evasion measures taken by tax administrators, there seems no solace for tax evaders in years to come. Further, this collaboration with Larsen & Toubro heralds a great step to stay abreast with the changing tax systems. However, introducing digital tools can push the cost on taxpayers which will make it an unwelcoming solution. But in the long run it can prove to be a cost-effective method for collection of State revenue efficiently and reducing tax avoidance and fraud. Therefore, effective use of technology tools must be encouraged by Government in the wake of changing times. Besides digital tools, policy instruments can also help to plug the loopholes in the taxation system. Legislative changes are necessary to streamline domestic legal framework with changing international tax collection regime. Simultaneously, tax regulatory authorities must introduce the new age tools and technology by way of rules, guidelines and directions. An active dialogue must be initiated among all the stakeholders such as legislators, taxing authorities, taxpayers, private sectors, enforcement authorities, etc.

Automation technologies can be used by Government to remind taxpayers about when they have to file tax returns, payment obligations, etc. This will prompt the taxpayers to fulfil their obligations and ensure higher rate of tax compliance. A pilot approach can also be adopted by the revenue authorities in which a technology solution can be implemented for an introductory test period in a specific area or business segment which is at high danger of tax avoidance and fraud. This can be useful in recognising any execution issues or unexpected reasonable inquiries. Once execution issues have been settled, the technology solution can be actualised more broadly in industry segments or areas which are the next priority in terms of risk. Further, cloud-based solutions can be adopted to manage, store and secure enormous data on taxpayers. To effectively manage cost, risk and data, use of blockchain technology can also be put in place.

Revenue authorities around the globe are progressively depending on digital technology solutions to collect, compile, analyse, administer and regulate the taxpayer’s information. Regulatory authorities of many countries are developing advanced technology tools and solutions to garner the revenue locked up and to add more citizens in the income tax net of their respective countries. Mining data from different traditional and non-traditional sources and then juxtaposing it with each other can enable to increase revenue recovery in form of tax collections, target compliance initiative and enhance general proficiency. Developing and utilising technological solutions promises to detect and fix the tax fraud, avoidance and crimes. However, there is no single fix to all the tax problems and therefore, working towards a win-win solution for both tax administrators and taxpayers becomes fundamental.

* Vth year student, BA LLB, Amity Law School, Amity University, Rajasthan, e-mail: [email protected].

[1] 183, The Finance Act, 2016 (Chapter IX), The Income Declaration Scheme, 2016, issued by Income Tax Department, Government of India, available at <https://www.incometaxindia.gov.in/Documents/IDS-2016/102120000000059020_38.htm>.

[2] The Income Declaration Scheme Rules, 2016, Notification issued by Ministry of Finance (Department of Revenue, Government of India), 19-5-2016, available at <http://www.incometaxindia.gov.in/communications/notification/notification33_2016.pdf>.

[3] Automatic exchange of information (AEOI), Swiss Federal Council, Federal Department of Finance, status as at September, 2017, available at <https://www.efd.admin.ch/efd/en/home /themen/wirtschaft–waehrung–finanzplatz/finanzmarktpolitik/automatic-exchange-of-information–aeoi-/fb-AIA.html>.

[4] Switzerland Agrees to Share Black Money Data with India, BloombergQuint, Press Trust of India News, 16-6-2017, available at <https://www.bloombergquint.com/law-and-policy/2017/06/16/black-money-switzerland-ratifies-automatic-information-sharing-with-india>.

[5] OECD (2014), Standard for Automatic Exchange of Financial Account Information in Tax Matters, OECD Publishing, Paris, available at <http://dx.doi.org/10.1787/9789264216525-en>.

[6] India joins the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Information (AEOI), Press Information Bureau, Government of India, Ministry of Finance, 3-6-2015, available at <http://pib.nic.in/newsite/PrintRelease.aspx?relid=122256>.

[7] Has demonetisation really boosted income tax collections?, Roshan Kishore, Livemint, 24-5-2017, available at <http://www.livemint.com/Politics/C4Q8mpskSbfEzmG8ZWBY9H/Can-we-measure-demonetisations-impact-on-income-tax-collect.html>.

[8] Annual Report 2016-2017, Reserve Bank of India, August 2017, available at <https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/RBIAR201617_FE1DA2F97D61249B1B21C4EA66250841F.PDF>.

[9]Cancelled registration of 100,000 firms post demonetisation: Modi, Deccan Chronicle, 3-7-2017, available at <http://www.deccanchronicle.com/business/economy/030717/modi-cancelled-registration-of-100000-firms-post-demonetisation.html>.

[10] Indian Advance Pricing Agreement regime moves forward with signing of two APAs by CBDT in September 2017, Press Release, Central Board of Direct Taxes, Department of Revenue (Ministry of Finance), 6-10-2017, available at <https://www.incometaxindia.gov.in/Lists/Press%20Releases/Attachments/660/Press-Release-Indian-Advance-Pricing-Agreement-9-10-2017.pdf>.

[11] CBDT Signs Four Unilateral Advance Pricing Agreements pertaining to various sectors of the economy including Pharmaceuticals, Information Technology and Construction, Press Information Bureau, Ministry of Finance, Government of India, 23-11-2016, available at <http://pib.nic.in/newsite/PrintRelease.aspx?relid=154182>.

[12] L&T Infotech bags $100 mn contract to help pin down tax evaders, Press Trust of India, Economic Times, 1-10-2017, available at <https://economictimes.indiatimes.com/tech/ites/lt-infotech-bags-100-mn-contract-to-help-pin-down-tax-evaders/articleshow/60900040.cms>.

[13] Technology Tools to Tackle Tax Evasion and Tax Fraud, OECD, 31-3-2017, available at <http://www.oecd.org/tax/crime/technology-tools-to-tackle-tax-evasion-and-tax-fraud.pdf>.

[14] Holiday Posts on Instagram are Tipping off India’s Taxman, Bloomberg, Shruti Srivastava, 28-7-2017, available at <https://www.bloomberg.com/news/articles/2017-07-27/instagram-posts-will-soon-help-sniff-out-tax-evaders-in-india>.

[15] The all seeing eye — An HMRC success story?, HMRC Administration, Institute of Financial Accountants, December 2016, available at <https://www.ifa.org.uk/media/653935/Tax-HMRC-Connect-system.pdf>.

[16] Clarification regarding number of Taxpayers added after Demonetisation, Press Release, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, August 2017, available at <http://incometaxindia.gov.in/Lists/Press%20Releases/Attachments/651/Press-Release–Clarification-regarding-number-of-Taxpayers-18-08-2017.pdf>.

[17] A Comparative Analysis of Tax Administration in Asia and the Pacific, Asian Development Bank, Electronic Taxpayer Services, April 2014, p. 42, available at <https://www.adb.org/sites/default/files/publication/41792/tax-administration-asia-pacific.pdf>.

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legalseat · 7 years ago

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Treatment of Extreme Results and Multiple-Year Data in Indian Transfer Pricing Law

[Ayush Chaturvedi and Chandni Bhatia are 4th Year B.A.LLB (Hons) students at Dr. Ram Manohar Lohiya National Law University, Lucknow]

Introduction

Arm’s length price is obtained by conducting a detailed “comparability analysis” as per the rules laid down in the Income-tax Act, 1961 (“Act”), the Income-tax Rules, 1962 (“Rules”) and the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, 2017 (“OECD Guidelines”). This analysis requires comparison of prices employed in the “controlled transaction” between the associated enterprises with those employed in “uncontrolled transactions” between independent enterprises. However, it is practically impossible to find two transactions which are entirely the same, and rule 10B of the Rules provides that the transactions in question will not be comparable if the dissimilarities materially affect the price or the profit arising from such transactions in the open market. These dissimilarities may be pertaining to certain factors like the functions performed or market conditions. This post deals with the factor of supernormal profits or losses arising in the uncontrolled transaction, its significance and its judicial treatment in India.

Extreme Results in Comparability Considerations

In accordance with rule 10B(2) of the Rules, while comparing the profitability of two companies in the same line of business, it is important to compare their functional aspects. It is probable that two companies with same profits may not be good comparables if their functions performed, assets utilized and risks borne (“FAR”) differ significantly from one another. This creates an issue at the time of finding appropriate comparables, specifically in a case where such comparables are earning super-normal profits. A view is sometimes taken that comparables earning super-normal profits should be rejected at the very outset as is the case where quartile or inter-quartile range is used for arriving at Arm’s Length Price (“ALP”). The OECD Guidelines observe that extreme results might consist of unusually high profits or losses. Extreme results can affect the financial indicators that are looked at in the chosen transfer pricing method (e.g. resale price, net profit indicator, transactional net margin). They can also affect other factors, which may be below the line but nonetheless reflect exceptional circumstances. Where one or more of the potential comparables have extreme results, further examination would be needed to understand the reasons for such extreme results.[2] The OECD Guidelines mandate carrying out of investigation by the taxpayer for determining the reasons of extreme results; therefore, comparables should only be excluded from the final set, provided the extreme results are due to presence of extraordinary circumstances which are not reflective of the performance of the industry in which the comparables operate.

Treatment in India

Rule 10B(2) mentions that reference needs to be made to the functions performed, taking into account assets employed or to be employed and the risks assumed by the respective parties to the transactions

No specific guidance is contained in the Indian transfer pricing regulations, i.e. Sections 92 and 92A to 92F of the Act read with rules thereunder, on exclusion of comparables having extreme results although the Central Board of Direct Taxes (“CBDT”) has issued guidelines for application of the concept of ‘Range’ by way of Notification No. 83/2015 dated October 19, 2015 but the same is applicable only in circumstances where at least six comparables are present in the dataset. Arriving at ALP through application of such range helps in taking care of the effect of extreme results, including both profit and loss which are absent in the case of arriving at ALP via arithmetic mean which remains to be dominant under the Indian regulations.

On a perusal of tribunal cases on this issue, it can be observed that Indian tax authorities tend to exclude comparables having diminishing revenue or consistent losses on the premise that these comparables do not represent the performance of the industry and hence would close down in years to come. Such an approach is not applied to comparables earning super-normal profits. These comparables are “cherry-picked” for determining the final set of comparables. This particular Indian approach tends to increase the tax base for the revenue authorities as, under the Indian transfer pricing regulations, the arm’s length margin has to be the arithmetic mean of margins earned by the comparables. On this practice of “cherry-picking”, a set of favourable third-party comparables either by the assessee or the tax authorities, the UN Transfer Pricing Manual, 2017 observes that “it must be ensured that potentially relevant external comparables are not excluded because of “cherry picking” of favourable third party information by either the taxpayers or the tax authorities, ignoring other information that does not support the position argued for. To come to a correct conclusion, an unbiased analysis of the facts and circumstances surrounding the transactions has to be carried out.” Further, in few recent cases, a consistent approach of sticking to the FAR principle has been adopted thereby excluding further analysis of such factors. For example, The Delhi Income Tax Appellate Tribunal (“ITAT”) in the case of Adobe Systems India Private Limited[5] held that comparables earning super-normal profits should be rejected out-right. However, the ITAT did not analyze the rationale for such high profitability.

There has been case law where the issue of exclusion or inclusion of comparable based solely on supernormal profits or losses has been raised. In Nortel Networks India (P.) Ltd. v. Additional Commissioner of Income-tax,[6] the ITAT observed that the specific characteristics of services provided, assets employed and risk assumed, i.e., the FAR analysis of the comparable, is decisive for inclusion or exclusion of comparables and that higher or lower rate of profit is nowhere prescribed as the determinative factor in this behalf. Only if the higher or lower profit rate results on account of effect of factors given in rule 10B(2) read with sub-rule (3), such a case shall merit omission. If higher profits are achieved due to factors not mentioned in the rule, then such case shall continue to find place in the list of comparables.

A landmark ruling on this issue was rendered by Delhi HC in the case of Chryscapital Investment Advisors (India) (P.) Ltd. v. Deputy Commissioner of Income-tax,[7] where the Transfer Pricing Officer (“TPO”) had included three entities as comparables which had very high profit margins as compared to that of the assessee and made certain additions to the assessee’s ALP. The assessee’s contentions with respect to the exclusion of the said three entities were based only on their exceptionally high profit margins for the assessment year in question and not on the grounds of functional dissimilarities. The Court observed that the mere fact that an entity makes high, or extremely high, profits or losses does not lead to its exclusion from the list of comparables for the purposes of determination of ALP. In such circumstances, an enquiry under rule 10B(3) ought to be carried out, to determine as to whether the material differences between the assessee and the said entity can be eliminated. Unless it is the case that the differences cannot be eliminated, the entity should be included as a comparable.

Thus, according to the High Court, in case extreme profit margins are observed, a further inquiry needs to be made in order to determine the suitability of the comparables. Since the purpose of transfer pricing is to make sure that the prices charged by the assessee are at arm’s length, the size of the turnover or the profit/loss margins of the assessee and comparable become vital factors which are required to be looked into. Further, if such differences in the turnover or the profit or loss margin is affecting the price or cost materially, they have to be removed by making suitable adjustments. If it is found that such high turnover or profit or loss is affecting the comparability and suitable adjustment is not possible to be made to remove such differences, it is only then that such comparable should be excluded. This is in line with the UN Transfer Pricing Guidelines, 2017 which in this regard observes that in order to come to a correct conclusion, an unbiased analysis of the facts and circumstances surrounding the transactions has to be carried out. Where one or more of the potential comparables are loss-making, further examination would be needed to understand the reasons for such losses and confirm whether the loss-making transaction or company is a reliable comparable.

This ruling of the Delhi High Court has been consistently followed by the tribunals throughout the country, although there has been an aberration in a Bombay High Court decision of CIT v. Pentair Water India Pvt. Ltd.[8] where the turnover of comparables was exponentially high compared to turnover of assessee company. It was held that the entities were not good comparables based solely upon the difference in turnover without going into any further inquiry. However, this case has been distinguished in subsequent decisions of the tribunals on the basis that the argument regarding any further enquiry was not brought forth before the bench.[9]

Multiple-Year Data

The use of multiple-year data assumes importance in the Indian context because, unlike OECD Guidelines which provide for an ‘inter-quartile methodology’ or ‘quartile methodology’, the Indian transfer pricing regulations provide mainly for “arithmetic mean” and the concept of range is restricted only in certain cases.[10] When data is gathered for comparable uncontrolled companies or transactions, there are often unrecognizable factors that might affect the data, causing them to either be too low or too high. Arithmetic mean has an inherent shortcoming of not excluding the effect of such factors, which may distort the overall results of the analysis.

According to Chryscapital, in case extreme results are observed in the comparable data, further inquiries need to be made in order to arrive at a finding on whether the comparable is suitable to be taken into account to arrive at an ALP. With this background, the issue of multiple-year data gains importance. Paras 1.49 to 1.51 of the OECD Guidelines recommend the use of multiple-year data because such data generally provides additional information on the product life cycle. The multiple-year data use can also mitigate the effect caused by business cycles or other economic distortions. The UN Transfer Pricing Guidelines observe that examining multiple-year data may be useful in a comparability analysis, but it is not a systematic requirement. Multiple-year data may be used where they add value and make the transfer pricing analysis more reliable. Circumstances that may warrant consideration of data from multiple years include the effect of business cycles in the taxpayer’s industry or the effects of life cycles for a particular product or intangible.

However, the Indian law is restrictive in this matter. The rules regarding use of multiple-year data were announced by the CBDT in 2015,[11] wherein it was provided that multiple-year data can only be used if the most appropriate method selected for benchmarking purposes is either Transactional Net Margin Method, Resale Price Method or Cost-Plus Method. Further, the data for the current year is mandatory to be considered. Most notably, rule 10B(4) as a general rule provides that only the relevant year’s assessment data should be taken into account. However, use of multiple-year data has been allowed for by way of the proviso to rule 10B(4) only where such data reveals facts which could have an influence on the determination of transfer prices.

Thus, in a scenario where an otherwise functionally similar comparable has extreme profit or loss margins, reliance may be placed on multi-year data as it will be useful in discovering, for example, whether the extreme results is due to exceptional circumstances or whether the comparables with similar FAR earn such level of profit in normal course. Conclusions based on multiple-year data would be one of the relevant factors in deciding whether or not comparable needs to be included or not in the TP analysis. However, the onus to lead evidence in order to be able to use multiple-year data remains upon the assessee.

It should be noted that Indian courts have imposed a restrictive threshold in order to allow the assessee to rely on multiple-year data. In Chryscapital, the Court has, on the issue of use of multiple-year data by the assesse, observed

The transfer pricing mechanism in the act and the rules prescribes that while determining the ALP, the arithmetic mean of all the comparables is to be adopted. This is to offset the consequences of any extreme margins that comparables may have and arrive at a balanced price. Similarly, the wide fluctuations in profit margins of the same entity on a year to year basis would be offset by taking the arithmetic mean of all comparables for the assessment year in question. In any case, in the event that the volatility is on account of a materially different aspect incapable of being accounted for, the analysis under Rule 10B(3) would exclude such an entity from being considered as a comparable.

The tribunals have consistently followed this decision on the question of use of such data which has led to a restrictive approach whereas the same may be an important factor for arriving at sound conclusions for determination of relevant comparable for arriving at ALP. This intent of placing primary reliance on relevant assessment year data is further discernible from the use of ‘shall’ in rule 10B(4) and use of ‘may’ in the proviso which provides for use of previous year data.

Conclusion

The problem regarding the use of extreme results and multiple-year data could have been easily resolved by providing more liberal rules for the use of concept of range. For example, US transfer pricing laws provide for a liberal use of the concept of range and acceptable ALP may range from 25th to 75th percentile whereas, in India, the same is allowed to be used only when at least six or more comparable are available and the acceptable ALP percentile is between 35 to 65. Notwithstanding the above, extreme results, including both profits and losses, is an important factor which should be carefully looked at in the comparability analysis to arrive at a consistent ALP, while at the same time it is worthwhile to mention that the same should not be used by way of “cherry-picking” to reach at pre-determined conclusions either by the tax-authorities or the assessee. The decision of the Delhi High Court goes a long way in consolidating the position in this regard; however, the latter part of the judgment dealing with the use of multiple-year data leaves a lot to be desired as multi-year data can be very useful in determining the true reasons behind the extreme results in the dataset of comparables. The above mentioned financial parameters provide useful guidance in ascertaining the functional profile of a tested party vis-à-vis comparable companies, and should be used together as tools to determine whether there are material differences between the taxpayer and potential comparables.

– Ayush Chaturvedi and Chandni Bhatia

[2] OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, 2017, para 3.63.

[5]I.T.A. No. 5043/Del/2010.

[6] [2014] 44 taxmann.com 26 (Delhi – Trib.).

[7] ITA 417/2014.

[8] Tax Appeal No. 18 of 2015.

[9] Income-tax Officer v. IGEFI Software India (P.) Ltd.

[10] Rampgreen Solutions (P.) Ltd. v. Commissioner of Income-tax.

[11] Notification No. 83/2015 dated October 19, 2015.

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cryptochurp · 7 years ago

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So Why Did Goldman Sachs-Backed Circle Really Buy Poloniex?

Goldman Sachs-backed startup Circle made waves earlier this week when it acquired cryptocurrency exchange Poloniex. A couple of experts share their thoughts on the implications for the soon-to-be first compliant US crypto exchange and its customers.

Most Crypto Exchanges ‘Over-Regulate Themselves’

As the dust settles on Circle’s acquisition of Poloniex, U.S. regulators are keeping a close eye on KYC/AML compliance of cryptocurrency exchanges.

Joseph Weinberg, OECD Think Tank Special Advisor and Chairman of Shyft, a blockchain protocol that will create a new standard for the KYC/AML mandates, shared his comments with Bitcoinist. He states:

Most crypto exchanges that are processing fiat to crypto transactions are very compliant and, in some cases, even more so than banks. It all really depends on jurisdictions and the compliance policies given by countries to crypto exchanges.

He continued:

For crypto exchanges, the challenge lies in how little formal guidelines there are from regulators. As a result, most of the industry has been doing self-compliance in absence of clear procedures. To err on the safe side, crypto exchanges over-regulate themselves. For example, most exchanges ask for passport verification in order to confirm users’ identities, whereas most banks only require government-issued IDs, such as drivers licenses.

Interestingly, Circle acquired the crypto exchange over a year after announcing it was shifting focus from Bitcoin to blockchain-based services. At the time, the company informed its Bitcoin customers that they can can cash out or transfer their balances to Coinbase, if they wished to continue to use the cryptocurrency.

So why did Circle decide to jump back into the crypto game?

It appears that Poloniex was struggling to keep up with the unexpected surge in new users as prices skyrocketed in the second half of 2017. Additionally, being based in the United States, the company also had to keep up with rising compliance costs as it rolled out its new KYC policies late last year.

Weinberg explains:

In the past, Poloniex had a lot of issues with onboarding new users and properly building out its KYC process, mainly due to the large amounts of time it takes to verify users. Given the level of KYC that exchanges force themselves to go through, scaling compliance is almost a separate product that the exchange has to build out.

According to him, this is where Circle comes in with their KYC/AML expertise. He says:

Through this acquisition, Circle will deploy more people to help handle compliance—more employees to build and process KYC due diligence faster. This is the same type of issue traditional banks have when it comes to scaling. Compliance costs keep multiplying, and yet, they aren’t always found to be effective.

The SEC Is Watching

Meanwhile, another takeaway has been put forth by Nathaniel Popper, author of Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.

Just got this slide from a confidential Circle presentation. It does more to explain Circle's acquisition of Poloniex than anything I have seen today. pic.twitter.com/gRXxDeXvxl

— Nathaniel Popper (@nathanielpopper) February 26, 2018

Popper noted on Twitter that the SEC informally suggested to Circle that no enforcement action will occur if the Boston-based startup “cleans up Poloniex and turns it into a regulated exchange.” He adds:

The SEC seems to be saying here that it’s okay if you broke the rules, as long as you get acquired by a legitimate player before we crack down on you.

The question now seems to be whether the SEC will apply this same thinking to other virtual currency exchanges if they are acquired by large players.

In addition to facilitating compliance, Circle also announced that it will add fiat bridges and expand operation to other markets. Namely, the company promised to explore “USD, EUR, and GBP connectivity that Circle already brings to its compliant Pay, Trade, and Invest products.”

This would imply that the exchange must also become compliant and answer to regulators from across the pond, who are currently scratching their heads on how to approach cryptocurrencies without stifling innovation in the process.

Therefore, regulators in the U.S. and abroad could be playing the carrot and stick strategy by providing an incentive for crypto exchanges to get acquired by the large players, such as Goldman Sachs, before a potential crackdown. Admittedly, this could also be a clever way for traditional finance to not only appear innovative through association but also assimilate would-be future competitors.

If true, the strategy may be futile and usher in the Streisand effect to boot. As technology advances, so do new methods of exchanging cryptocurrency. Therefore, assimilating centralized exchanges like Poloniex could force users to migrate en masse to decentralized exchanges and further bolster their development.

Why do you believe Circle acquired Poloniex? Share your comments below!

Images courtesy of Shutterstock, Twitter/@nathanielpopper.

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#BTC #HODL #ETH #CryptoChurp.com

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fredschlenker04-blog · 8 years ago

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Make it possible for Personalized Assertions On The Value From An Extra. Problem # 315. Google.com.

I guess it happens as little shock that Christine Varney has removed the Segment 2 File The remarks created in the claim withdrawing the Report indicate effectively, that Varney really isn't convinced by reviewing this blogging site, to name a few traits. An essential potential sticking point for the FTC's assessment of the merger is its current choice to challenge the Ardagh-Saint Gobain merger. Merger cases broken or rise on bases and also economics, as well as following full week our team will certainly see if the Ninth Circuit acknowledges this as each St. Luke's and the FTC assert their scenarios. We took that for approved during the time, however automakers delivered our team with a plenitude from luxurious shades in the mid-1990s.

10 Features of gel You Must Expertise It Yourself.

Complying with Singham's discussion, I covered reviews from the ACMD trouble performed lately by primary global associations, consisting of the World Financial institution, the Company for Economic Collaboration and Growth (OECD, a financial think tank financed through developed countries), and also the International Competition Network (a network of nationwide competition organizations and also professionals lawful as well as economical advisors that produces non-binding best methods" recommendations coping with competitors legislation as well as policy). The 2018 Honda Journey Touring's 10-speed transmission performs not suck. Still, despite virtually void purchases, Fiat Chrysler Autos isn't ready to throw in the towel right now. It is actually challenging to recognize precisely exactly how this brand new technology is going to be actually integrated into the sector, however its effects are actually probably to promote technology coming from outside the 3 big organizations that will certainly come from the acquisitions and also mergers pointed out above. Carried out certainly not locate sufficient documentation that Google engaged in search manipulation, preferential treatment of Google companies, syndication deals, circulation deals, omission of competitors from its YouTube mobile phone app, or even linking from mobile phone adds with those on Computers and also tablet computers for an anti-competitive reason, and/or that the methods resulted in a substantial lowering or even prevention of competitors in any relevant market. Our experts may view the fact from Christ's phrases shown as vendors are displaced from business since they will definitely not jeopardize their idea in the truth that marital relationship is actually the union of one man and one female. My target in my communication was actually to convince this wonderful female that as for faith she was completely wrong and that Christianity was a fairy tale for grandmothers and also ignorant, superstitious individuals.More hints, you could call us at the web page. twimg.com/profile_images/452651043851997184/iWbS6srL_400x400.jpeg" width="313" />

10 Truths That No one Determined You Around gel.

The Commission's invitation to conspire cases, and also Wright's plan claim thereby add to General Motors the potential to create an Area 5 offense where the effect from the perform is to produce a considerable risk of very competitive injury." Our experts perform certainly not disagree, however note that this gap packing" is most likely pretty tiny due to the fact that the Team from Justice indicts most such cases as cord or even mail fraudulence. With all situations, Pro-Truth supporters get several assistance and training from the PTP core planners in their initiatives. I Linda Diane Wattley took the Pro-Truth Guarantee because I believe in just what this concept stands on. The Declaration itself need certainly not enter into too much particular when, along with a few phrases, this takes present day antitrust jurisprudence embodied in cases like Trinko, Leegin, and also Brooke Team right into UMC law. Consistent with that arrangement, American Express transferred to urge specific adjudication, but the companies countered that the prices from expert study important to prove their antitrust insurance claims will substantially surpass the max healing for any specific complainant, thereby averting them coming from successfully vindicating their federal government judicial liberties under the Sherman Show.

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To the level the Merger Guidelines are deciphered or even related to impose crooked problems upon the celebrations as well as organizations to develop anticompetitive effects and productivities, respectively, such interpretations perform not make economic sense as well as are irregular with a merger policy created to market consumer well being. The expense's proposal to compel coders to offer web content to buyers a la carte might actually result in greater general rates for much less information. Yet Our lawmakers directed the FCC in Section 202( h) from the Telecom Act of 1996 to evaluate every one of its own neighborhood possession rules every four years to find out whether they were actually still necessary in everyone rate of interest as the end result of competition," as well as to rescind or even tweak those that just weren't.

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gtptransferpricing · 3 years ago

Link

#Transfer Pricing #global transfer pricing #transfer pricing management

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postolo · 7 years ago

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Tax dodgers to come clean—Government collaborates with Larsen & Toubro Infotech

Introduction

Government’s initiative to fight tax fraud and evasion

Using data analytics to ensure tax compliance

Use of taxation technology in the international counterparts

Conclusion and recommendations

* Vth year student, BA LLB, Amity Law School, Amity University, Rajasthan, e-mail: [email protected].

[5] OECD (2014), Standard for Automatic Exchange of Financial Account Information in Tax Matters, OECD Publishing, Paris, available at <http://dx.doi.org/10.1787/9789264216525-en>.

[8] Annual Report 2016-2017, Reserve Bank of India, August 2017, available at <https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/RBIAR201617_FE1DA2F97D61249B1B21C4EA66250841F.PDF>.

[13] Technology Tools to Tackle Tax Evasion and Tax Fraud, OECD, 31-3-2017, available at <http://www.oecd.org/tax/crime/technology-tools-to-tackle-tax-evasion-and-tax-fraud.pdf>.

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