BRICS Cooperation on Transfer-Pricing
Disputes
Prelims:
International
relations
Mains:
GS
Paper II: International relations, GS Paper III: Taxation, international trade
Current relevance:
Finance
Minister urged BRICS nations to work together by sharing experiences on treaty
interpretation and multilateral negotiations in international taxation.
India
proposed two new BRICS working groups on International Taxation &
Transfer Pricing and Revenue Statistics.
Highlights:
1.Transfer Pricing
· Transfer pricing refers to the pricing of goods and services
exchanged between related firms.
· International transfer-pricing disputes arise when
countries seek to ensure that multinational companies (MNCs) are taxed
on profits attributable to their respective jurisdictions.
· Differences in the allocation of taxable income among
countries can create disputes between taxpayers and tax authorities as well
as between tax authorities of different jurisdictions.
2.
BRICS Cooperation on International Taxation
· BRICS nations were urged to share experiences on treaty
interpretation and multilateral negotiations to improve coordination on
international tax matters.
· Greater cooperation is particularly relevant because
global tax negotiations are currently being undertaken and their outcomes could
shape cross-border taxation for the coming generation.
3. Proposed BRICS Working Groups
· India proposed two new working groups:
o
International Taxation and Transfer Pricing
o
Revenue Statistics
· These groups would provide a framework for cooperation on
key areas of international taxation and revenue-related data.
4.
Challenges for Developing Countries
· Global transfer-pricing disputes can disproportionately
burden developing countries.
· Differences among countries over the allocation of
taxable income can lead to prolonged disputes involving taxpayers and tax
authorities.
5.
Multilateral Tax Cooperation
· The UN Framework Convention on International Tax
Cooperation is among the multilateral tax issues under active negotiations.
· Decisions taken through these processes over the coming
years are expected to influence the framework governing cross-border
taxation.
Source: THE HINDU - https://www.pressreader.com/india/dt-next/20260924/282114938490802?srsltid=AU7gw4VFUNjLzMzST6vCimL7PKp6KqGqFRepYX19cdIchXvTFgJ6ekwP