India’s 2009 Budget Highlights What U S Companies Should Not Miss by EON

VIEWS: 54 PAGES: 2

SUNNYVALE, Calif.--(EON: Enhanced Online News)--India’s proposed Safe Harbor rules for transfer pricing could allow income tax authorities to accept the price set by the tax payer, significantly easing transfer pricing

More Info
									India’s 2009 Budget Highlights: What U.S. Companies S
Not Miss?
New Transfer Pricing Rules, Speedy Tax Dispute Resolution Welcome Change but Companies May Need to Revisit C
Agreements Says Nair & Co.

August 05, 2009 09:17 AM Eastern Daylight Time  

SUNNYVALE, Calif.--(EON: Enhanced Online News)--India’s proposed Safe Harbor rules for transfer pricing could allow inco
to accept the price set by the tax payer, significantly easing transfer pricing hassles for U.S. business but companies may need to rev
agreements, Nair & Co., a leading global integrated solutions provider helping companies expand overseas, said on Wednesday.

Under the new measure proposed in India’s 2009 budget, the Central Board of Direct Taxes (CBDT) is being empowered to form
define the circumstances under which the income tax authorities can accept the transfer price declared by the tax payer.

“The transfer pricing changes incorporated in the budget propose that the 5% range benefit would be available only if the arm’s leng
+/-5% range of the transfer price,” said Nair & Co.’s vice president Asia Operations, Venkatesh Eswaran, who is based out of Mu

“This would also mean a review of the benchmarking analysis report to ensure that the arm’s length price falls within +/-5% to avoid
the revenue,” he added.

Alternative Dispute Resolution Mechanism (ADRM)

In a related proposal for setting up of the Alternative Dispute Resolution Mechanism (ADRM), the government delivered on hopes t
strong re-election mandate to push through pro-market reforms. The ADRM, aimed at encouraging foreign investments, will ensure
resolution of transfer pricing disputes between the tax authorities and foreign companies.

“Prolonged litigation over transfer pricing issues is a pain for foreign companies. The new rules could usher in a certain organization
on transfer pricing assessment. We are waiting for the fine print but careful evaluation of the new proposal could deliver significant v
companies operating overseas as it would allow the tax payer to know that for a specific service or industry what mark-up should b
costs,” said Dr. Shan Nair, co-founder of Nair & Co.

“It is very important for a foreign subsidiary to be remunerated by other group companies on an arm’s length basis. There is high lev
focus in this area and companies need to be cautious in dealing with transfer pricing issues,” he added.

Fringe Benefit Tax

India’s 2009 budget also proposes scrapping of the Fringe Benefit Tax (FBT), which could reduce administrative costs and tax bur
companies but also means that some U.S. firms may need to revisit their subsidiary contracts.

With the abolition of FBT, employees themselves will have to pay taxes onEmployee Stock Options Plans (ESOPs) or stock option
other fringe benefits, which include entertainment, gifts etc., instead of the employers paying fringe benefit tax on these benefits.

“Companies could be required to amend the Cost Plus Intercompany Agreements of the subsidiaries and may also need to consider
Stock Option Plan. If this proposal passes, companies must also revisit the salary structure of the employees,” said Eswaran.

Export Profits

In a major boost for the Information Technology and Business Process Outsourcing industry (IT-BPO), India extended to 2010-20
on export profits for entities eligible under section 10A and Section10B.

Award-winning Nair & Co. provides businesses with an integrated solution in the HR, finance, tax, compliance and legal arenas ma
move overseas less risky, stress free and more strategic. Headquartered in U.K., it currently has 700+ client operations in over 40
offices in India, China, U.S. and Japan. In 2009, Nair & Co. was named among the top 100 outsourcing services providers in the
International Association of Outsourcing Professionals (IAOP).

To learn more about Nair & Co. please visit www.nair-co.com.

Contacts
Nair & Co.
Diana Rohini LaVigne, 408-515-9048
Nandita Verma, 408-501-8867
media@nair-co.com

Permalink: http://eon.businesswire.com/news/eon/20090805005317/en
e about Nair & Co. please visit www.nair-co.com.

Contacts
Nair & Co. Diana Rohini LaVigne, 408-515-9048 Nandita Verma, 408-501-8867 media@nair-co.com Permalink: http://eon.businesswire.com/news/eon/20090805005317/en


								
To top