International Taxation & Transfer Pricing
International Taxation and Transfer Pricing
With several entities investing in India and also domestic entities expanding and looking for business opportunities outside India, the number of cross border transactions has increased manifold. Thus, there is a need to implement strategies to address various tax opportunities to achieve growth. These transactions need to be analyzed keeping in mind the tax laws of both the countries. Entities need to plan their business activities in such a manner that these transactions are well within the given regulatory framework, compliances are made within the prescribed timelines while ensuring that the entity does not loose sight of it’s core deliverables.
Understanding this need of the entities, UJA offers a complete spectrum of international tax services which include:
- An in depth analyses of double taxation avoidance agreements (DTAA) and bilateral agreements
- Cross border transactions
- Expatriate taxation
- Transfer Pricing
- Evaluation of Permanent Establishment (PE) exposure
Analysis of Double Taxation Avoidance Agreement
A double taxation avoidance agreement (DTAA) is signed between two or more countries with the objective that tax – payers in these countries can avoid being taxed twice for the same income.
Keeping in mind the transactions undertaken by the entity, we help understand the tax implications of such transactions in the light of the tax treaty to ensure the elimination of double taxation, advice on the withholding tax rates as per the Income Tax Act vis-à-vis tax treaties.
International and Cross Border Taxation
Our international tax professionals help entities address various concerns pertaining to cross border transactions.
- Understanding the business of the entity and the transactions undertaken and help structure these in order to mitigate the risk of Permanent Establishment (PE) exposure
- Advisory on cross border transactions to help manage Permanent Establishment (PE) exposure and also minimize double taxation
- Inbound tax advisory/outbound tax advisory
- Identifying competitive supply chain to drive efficiencies for existing and target markets
- Assist in tax efficient repatriation of funds
- Help understand the applicability/mitigation of withholding taxes on cross border payments (royalties, interest, fees for technical services)
- Understanding the impact of POEM regulations on entities at the group level evaluating these in the light of the Indian regulations and comparing these with the POEM regulations adopted globally
- BEPS and GAAR Advisory
- Advice and implementation of cross border M&As, financing transactions, investment restructuring and advice on JVs and collabarations
Expatriate Taxation
Very often entities are faced with issues pertaining to expatriate taxation. These include determination of residential status of expatriate employee, exposure of Permanent Establishment (PE) risk in India for overseas employers with regard to their inbound expatriates etc.
UJA provides comprehensive solutions to various issues faced by entities pertaining to expartriate taxation.
- Determination of residential status on expatriate employees in India and the incidence of the tax on income earned
- Formulating employment compensation structures in light of the Income Tax Act
- Computation of withholding taxes from salaries of expatriate employees and filing of withholding tax return
- Structuring employment agreements for expatriate employees with a view to mitigate the risk of Permanent Establishment (PE) for overseas employers in India
- Preparing and filing of personal income tax returns
- Drafting of secondment agreements
Transfer Pricing
Transfer pricing (TP) has grown into one of the most contentious issues worldwide. Entities not only need to plan their international transactions within the existing framework but also in anticipation of the future uncertain tax policies which may create an impact on these business.
UJA offers optimized solutions – planning, compliance, advisory services:
- Formulating and implementing global transfer pricing policy
- Review existing TP policy and ensuring adherence
- Assisting in valuation of business associated with business restructuring, mergers and acquisitions etc.
- Maintenance of robust documentation as per applicable laws and assisting in compilation of master file and country specific documentation
- Benchmarking support
- Audit under Transfer Pricing and Issue of 3CEB as required by the Indian Income Tax Laws
- Drafting and review of inter - company agreements
- Representation before tax authorities & Litigation
- Due diligence from transfer pricing perspective.
- Advice on BEPS readiness and implementation and on the applicability of master file and country by country reporting (CbCR) requirements, functional and comparability analysis, advise on transfer pricing risk analysis and alignment with group’s master file
- Advance Pricing Agreements (APA), Mutual agreement procedures (MAP), Safe Harbour applications and transfer proceedings
Country By Country Reporting (CbCR)
Country By Country Reporting (CbCR) is a part of OECD’s base Erosion and Profit Shifting (BEPS) Action Plan 13. Large Multinationals have to prepare and the share a CbC reportable template with tax authorities in the country where they have a taxable presence.
The tax administration of a country shall use the country – by – country report for purpose of assessing high level transfer pricing risks and other base erosion and profit sharing risks.
Three – tier structure of TP documentation
- Country – by – Country Report (CbC Report): The CbC report contains information regards the functions performed, assets owned, profits earned, revenue generated, personnel employed, taxes paid, capital structure, retained earnings etc. with respect to each entity of the group which are located in different jurisdictions.
- Master File: A master file report provides an overview of the groups global business operations, it’s policies on how intra – company transactions are accounted. It is generally prepared by the ultimate parent company.
- Local File: A local file comprises of functional and economic analysis of international transactions undertaken by the local entity.
We at UJA offer the following services :
- Identification of data to be used.
- Evaluate the information available vis – a – vis the data required by the CbC report.
- Assess practicalities around filing of CbCR
- Final review and filing.
