Specific Issues in Transfer Pricing and Avoiding Litigations: An Indian Perspective

Abstract

Transfer pricing remains an inevitable tool for MNCs to carry out intra-company transactions. From the literature, misuse of transfer pricing has been observed with respect to advertisement, marketing and promotion (AMP). This research paper attempts to demonstrate the instances wherein abuse of transfer pricing was witnessed in transactions. Being difficult to measure and because of certain legality issues, transactions involve AMP have been exploited for tax-evasion purposes. Apart from the concept, this paper also stresses upon the mechanism through which the process of transfer pricing in MNCs can be smoothened and litigations can be avoided