With a slew of high profile cases in the past relating to income tax authorities targeting MNCs with tax bills, it seems that the global companies are now making efforts to curb the unexpectedness of such bills; all this to avoid future surprises. As per the WSJ, global companies are now believed to be negotiating with authorities to clarify ahead of time what they will owe in the future.
As can be seen from today's chart of the day, MNCs tax demand from the income tax authorities have risen in recent years. This has been largely due to additional taxes being a result of how multinational companies have been recording transfer pricing - the price at which companies within a group transact, but outside the country.
As we have stated in the past, there is nothing wrong in the concept of transfer pricing. After all, what is earned in India should certainly be subject to Indian taxes. However, when matters are taken too far, it would only hinder the foreign investment climate in the country, something which is definitely against the 'Make in India' efforts.