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Synergies Cannot Be Taxed

Synergies Cannot Be Taxed

A discussion at the OECD's Working Party No 6 meeting on the transfer pricing aspects of intangibles brought the aspect of synergies into discussion. Taxand India responds to the debate.

While the organisation's discussions with interested business parties will not necessarily be taken on board, when a draft on the transfer pricing aspects of intangibles is released in 2013, business generally maintained that synergies cannot be taxed and are simply a fact of business.

"The issue of synergies means that one plus one doesn't always make two," said Sanjiv Malhotra, Taxand India, at the table. "When a multinational company conducts business with its related parties, something intangible is created, as an extra, that is a fact of business, which happens naturally and cannot be valued or remunerated for taxation purposes."

The issue will be continue to be debated in more detail.

Your Taxand contact for further queries is:
Sanjiv Malhorta
T. +91 124 339 5075 {C}{C}{C}

First published in TP Week, 8 November 2011

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