The client is an Indian multinational software company with subsidiaries in several countries. The UK subsidiary provides sales and technical support services to the Indian parent. The objective was to formulate a transfer pricing policy that would simultaneously comply with the Indian and the UK transfer pricing regulations and also maximise the after tax cash flows for the Group at large. SKP’s transfer pricing study, demonstrated that almost 85% of the total profits of the Group accrued to the India parent, which enjoyed complete tax exemption under section 10A. As a result the effective tax rate for the Group at large, worked out to only 1.59%!
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