Govt likely to relax transfer-pricing regime, make eligibility rules flexible

Move aimed at making safe-harbour rules more attractive and practical

- MONIKA YADAV

The government is likely to relax India’s transfer pricing regime, which concerns taxing payments by multinationals, making flexible its rules for eligibility under it and reviewing some of its provisions, according to a government official.

The proposed changes are expected to be notified before the Budget in February is presented.

Transfer-pricing rules govern how cross-border transactions between related entities of multinationals are priced for taxing to prevent profit shifting.

Safe-harbour rules, which will be reviewed, are an optional arrangement that allows eligible taxpayers to avoid detailed transfer-pricing audits by accepting pre notified profit margins.

’At present, safe-harbour rules apply to specified transactions with transaction values up to a predefined level.