International Taxation

The key provisions of Transfer Pricing regulations in India encompass the determination of arm's length pricing in transactions between related parties. These provisions require taxpayers to maintain contemporaneous documentation, including transfer pricing reports, to demonstrate that their transactions are conducted at arm's length prices. The regulations empower tax authorities to make adjustments to the prices charged in such transactions if they are not consistent with the arm's length principle. Compliance with these regulations is crucial to ensure that cross-border transactions are conducted on fair terms, preventing profit shifting and ensuring appropriate taxation.

The FTC mechanism in India allows taxpayers to claim a credit for taxes paid in a foreign country against their Indian tax liability. It avoids the double taxation of the same income in both countries. Under the FTC mechanism, taxpayers are eligible to claim a credit for the foreign taxes paid, limited to the extent of the Indian tax liability on that specific foreign income. This ensures that the taxpayer is not taxed twice on the same income and promotes fairness in international taxation.

Cross-border mergers and acquisitions involving Indian companies require careful attention to legal requirements. This includes obtaining regulatory approvals from entities such as the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Competition Commission of India (CCI). Compliance with Foreign Exchange Management Act, 1999, transfer pricing rules, and intellectual property rights is also crucial. AG's team of financial and legal experts experienced in international law manage every aspect of merger & acquisitions, including modeling, structuring, reporting and due diligence.

Indian residents with foreign assets or investments have compliance requirements to fulfill. They must report their foreign assets, including bank accounts and investments, in their income tax returns. Additionally, they need to disclose foreign bank accounts under the Foreign Bank Account Reporting (FBAR) provisions. Non-compliance with these requirements can result in penalties. It is essential for Indian residents to stay updated on the reporting obligations and fulfill them to ensure compliance with tax laws and avoid any legal consequences.