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MNC Woes: IT Dept Claims Transfer Pricing up 85% in FY12

MNC Woes: IT Dept Claims Transfer Pricing up 85% in FY12
Global
29 Nov 2012

This article was first published in the Financial Express, 26 November 2012

In what reflects India's aggression in tax audits involving multinational corporations (MNCs), the revenue department in its 2011-12 audit has claimed income suppression of R44,532 crore ($8billion) pertaining to transfer pricing, up 85% over the comparable figure in the previous year's audit. Companies have been asked to pay nearly a third of this amount called 'transfer pricing adjustment' as tax, according to finance ministry sources.

The sharp increase in these tax claims comes at a time when observers say the increasing tax scrutiny in Asian economies is slowing the pace at which multinationals expand their business in the continent. "Over half (53%) of multinationals in Asia believe their expansion plans have been curbed by overzealous tax authorities," said a survey based on interviews of CFOs done by tax consultancy firm Taxand.

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This article was first published in the Financial Express, 26 November 2012

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