India Introduces Secondary Adjustment and Interest Limitation Rules

On Mar 31, 2017, India's Finance Bill, 2017 was enacted (Finance Act 2017) and became effective as of Apr 1, 2017. Finance Act 2017 introduces a secondary adjustment provision and an interest limitation rule in conjunction with the transfer pricing (TP) regime. The secondary adjustment provisio...

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Bibliographic Details
Published in:Journal of International Taxation 2017-07, Vol.28 (7), p.8
Main Authors: Joseph, Riad, Uchil, Sameep, Finnerty, Chris, Parsch, Kazuyo, Yap, Bee-Khun, Martin, Trang, Kapadia, Sudhir
Format: Article
Language:English
Subjects:
Compliance
Income taxes
International taxation
Multinational corporations
Permanent establishment
Provisions
Tax legislation
Transfer pricing
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Summary:On Mar 31, 2017, India's Finance Bill, 2017 was enacted (Finance Act 2017) and became effective as of Apr 1, 2017. Finance Act 2017 introduces a secondary adjustment provision and an interest limitation rule in conjunction with the transfer pricing (TP) regime. The secondary adjustment provision in the Indian Tax Law addresses the collateral consequences arising from a primary TP adjustment. These provisions generally apply for primary TP adjustments made for tax years 2016-17 and thereafter. Multinational enterprises (MNE) need to review the impact of the new interest limitation rule on their intragroup finance and treasury structures involving Indian operations. MNEs should also review their financing arrangements to ensure that they are compliant for TP purposes.
ISSN:1049-6378