TP controversies and dispute resolution management

• Assistance in TP audit support services and in preparing and briefing for proceedings before the Commissioner of Income Tax (Appeal) [CIT(A)], Dispute Resolution Panel (DRP) and the Income Tax Appellate Tribunal (ITAT) in relation to TP matters
• Assistance in determining appropriate strategy with regard to disputes relating to Transfer Pricing, including considering different dispute resolution mechanisms like: 
  • Mutual Agreement Procedures (MAPs)
  • Safe Harbour (SH) Rules
  • Advance Pricing Agreements (APAs)

Given the strict guidelines of the Indian TP regulations, companies are commonly subject to audits by TP officers wherein TP enquiries could be rather time-consuming and might involve a substantial commitment of resources for assembling the paperwork, preparing responses and dealing with local tax authorities. KPMG in India’s GTPS team has extensive experience of guiding client in responding to tax authority challenges. Drawing on their experience, our professionals can work with you to help prepare effective responses for submission with the tax authorities, preparing robust economic analyses, assist in fortifying appellate strategies and provide guidance in devising supportable defence at all appellate levels in coordination with the TP litigation specialists.

A major risk international business transactions face is potential double
taxation by multiple tax authorities. Most tax treaties negotiated between
countries provide a mechanism to avoid double taxation. Multinationals can file a MAP claim requesting the relevant fiscal authorities to resolve disputes
concerning double taxation. The experienced GTPS professionals of KPMG in India can provide assistance in lodging a MAP claim requesting the relevant
cross-border revenue authorities to resolve disputes concerning double taxation and assist in preparing the relevant MAP submissions by involving our team of specialists, including senior ex-TP regulators and our GTPS network.

The Finance Act, 2009, had introduced Safe Harbour (“SH”) provisions under TP regulations with a view to reduce litigation. The operative Rules were notified in September 2013. SH is defined to mean circumstances in which the income tax authorities shall accept the transfer price declared by the taxpayer subject to fulfilment of certain prescribed conditions. KPMG in India can provide guidance on the eligibility, feasibility and period for which the SH option is to be exercised, assist with the procedural requirements relating thereto, and provide guidance for representations before the respective revenue authorities and provide assistance in complying with the prescribed SH norms.

An APA is an agreement between the tax authorities and the taxpayer that
determines in advance the most appropriate TP methodology or the Arm’s Length Price (“ALP”) for the covered intercompany international transactions. Since its inception in July 2012, it has brought greater certainty in these taxing times by stemming the tide of burgeoning controversies and drawn out TP litigation. The Indian TP regulations provide the option of unilateral/bilateral/multilateral APAs with optional pre-filing consultations.
Rollback provisions have also been introduced in the regulations and taxpayers now have an option to exercise Rollback provisions for up to four financial years preceding the first year covered under the APA.

KPMG in India’s GTPS team comprises:

• Professionals who have extensive experience in dealing with the Indian APA authorities as well as team members who have earlier worked in the Revenue
• Experienced accountants, economists, and industry specialists with practical experiences of having dealt with tax authorities, the challenges covering detailed, authoritative economic justifications for existing transfer prices as well as having a vast experience in intercompany TP planning and cross-border dispute resolution
• Former tax authority officers and ex-regulators with detailed knowledge and experience regarding the general approach adopted by tax authorities, who can advise on suitable approaches for countering aggressive regulatory positions.

Our team can provide assistance in planning and making available a robust economic analysis as may be required for the APAs, assist in preparing strong responses to detailed inquiries and provide guidance for discussions with the APA authorities. This could include conducting a feasibility analysis for the APA, assisting with preparing and pre-filing consultation meetings with APA authorities, detailed function, asset risk, economic analyses, providing guidance for preparation and filing of APA application, filing of Rollback application, negotiation with the APA team, finalisation of the APA and preparation of the Annual Compliance Report and also assistance during the Annual Compliance Audit.