How does a taxpayer demonstrate the arms length nature of international transactions?
This is an extensive process requiring a detailed understanding and documentation of the taxpayer’s business, including the manner of price setting for international transactions. A thorough search for comparable uncontrolled transactions and performing appropriate adjustments to the same to demonstrate the arm’s length nature of the pricing, using one of the prescribed methods most appropriate in the given facts and circumstances, is essential. What are the key challenges faced by taxpayers in TP? Since the introduction of the regulations, transfer pricing assessments have been completed for three financial years, and based on press reports, the quantum of overall transfer pricing adjustments has increased every year. In many cases, absence of proper documentation bringing out a proper business perspective has made it difficult to demonstrate the arm’s length nature of pricing. However, in some cases, inadequate clarity on certain technical matters coupled with very limited judicial p
