The Indian government recently released a new report, White Paper on Black Money. The report claims that more than 60% of international trade is conducted between related parties, and that the companies can exert significant influence in locating costs and revenues.
Several practitioners have criticized the report as utilizing skewed information in terms of items excluded or incorrect. Other factors that influence pricing within a given economy were either ignored or minimized by the report, further tilting the report.
While the report presented a chart outlining the growth in transfer pricing adjustments made by auditors, no information on the amount sustained was presented. This potentially overstates the issue. Transfer pricing continues to be a area ripe for controversy and tax payers should consider bolstering their documentation to support their positions.
The story was originally published on Thomson Reuters Checkpoint.