The Problem of 'Excess' Advertising, Marketing & Promotion Expenses in Transfer Pricing
The transfer pricing law has been brought in to prevent the cases of cross-border profit shifting that might occur amongst enterprises who are related parties. Due to huge Multinational Enterprises (MNEs) now being able to function and conduct business activities across different countries at the same time, low tax jurisdictions are preferred for obvious reasons. This has led to these MNEs abusing the tax laws for the purposes of avoiding tax by shifting their profits to these low tax jurisdictions. One such issue is the issue of excess Advertising, Marketing and Promotion (AMP) expenses by domestic entities of foreign associated enterprises and their taxability. Under the Indian Transfer Pricing law, which is covered by Chapter 10 of the Income Tax Act, 1961, no provisions which deal directly with the issue of AMP expenses exist. The Income tax authorities have made attempts to bring it under their taxing umbrella, with little success. For this reason, it has been used by various entities for the purpose of evading tax. The courts, be it the the High Courts or various Income Tax tribunals, have made it abundantly clear, that if the tax authorities want to tax excessive and non-routine AMP expenses, they have to do so within the ambit of the provisions of the IT Act and cannot bring a test (Bright Line test), which is not within the scope of the Act. Amendments in the law are required. It is in this context that the current paper has analyzed the issue of ‘excessive’ AMP expenses
Year of publication: |
[2021]
|
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Authors: | Mittal, Utkarsh |
Publisher: |
[S.l.] : SSRN |
Subject: | Verrechnungspreis | Transfer pricing | Theorie | Theory | Werbung | Advertising | Preismanagement | Pricing strategy |
Saved in:
freely available
Extent: | 1 Online-Ressource (17 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 10, 2020 erstellt |
Other identifiers: | 10.2139/ssrn.3751378 [DOI] |
Classification: | K34 - Tax Law |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10013245282
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