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Transfer pricing policy for a leading international shipping firm

Engagement: Formulating a transfer pricing policy with respect to transactions with its subsidiary (agent of foreign company in India) that minimises the overall taxes of the group

Solution

  • Incidental shipping income not taxable in India (Article 8 of the Tax Treaty)
  • Tax savings of INR 123 million for 3 years and counting

 

Value Delivered

  • Re-characterisation of the Indian agent as a service provider, changing the method of remunerating the agent from commission basis to cost plus basis, and transferring all incidental shipping income to the parent company
  • Minimising taxes in India with respect to the income of the agent