Thursday, June 24, 2010

Indian state cracking down on rampant transfer pricing abuse

We have previously reported on India's efforts to crack down on transfer pricing abuse. India ranks amongst the countries most vulnerable to illicit financial flows. The majority of these flows arise from trade mispricing. After intensive investigation, the Indian revenue authorities have announced that they will imminently serve demands on over 8,000 foreign companies who they deem to have used abusive transfer pricing strategies to shift profits offshore.

Enormous sums are involved: according to this article audits by the Income Tax Department have identified up to Rupees 8,500 crore (approximately US$19 billion) of lost revenues.

We welcome this crackdown by the Indian government and look to them to take the lead within the G-20 countries in pushing for an international accounting standard for country-by-country reporting that will help tax authorities identify instances of flagrant pricing abuse.


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