Key Takeaways
- Three-year audit cycle to replace current annual exams.
While tariffs, Pillar 2, and the like have dominated recent international tax and transfer pricing conversations in the western hemisphere, one of the most significant transfer pricing developments of the year has received little attention.
The Finance Minister of India, in his Union Budget for 2025, promises massive reforms in India's complex transfer pricing regime. Among other proposals, the bill calls for a streamlined transfer pricing controversy process which would include "block assessments." Such assessments, which establish arm's length pricing for intercompany transactions, would cover a period of three financial years under a single TP audit. That replaces the current annual process, providing a significant reduction in the burden faced by taxpayers. The Bill also stated the government's intention to expand TP safe harbor rules to provide additional clarity and tax certainty on common intercompany transactions.
India is far and away the most active jurisdiction in terms of TP audits and controversy, accounting for more than half of all TP cases by volume. I have clients ranging from $50M in top-line revenue to Fortune 500 conglomerates who have struggled with the intensive, time-consuming, and often contentious process, and the announcements in the Union Budget provide a reason for optimism that the Indian government may be prepared to take measures to address these difficulties.
Chad Martin directs Eide Bailly's Transfer Pricing Services practice.
