When to Worry About Transfer Pricing

The Cross-Border Compliance Challenge

Many successful Indian startups have a global structure, often with a parent company in the US or Singapore. This structure is great for fundraising, but it creates a major compliance obligation: Transfer Pricing.

Whenever your Indian entity has transactions with its foreign parent or subsidiary (e.g., providing R&D services or receiving management fees), you must prove to the tax authorities that the price of these transactions is fair and at "arm's length." Failure to do so can result in significant tax adjustments and penalties.

When Transfer Pricing Becomes a Concern

• You have a parent or subsidiary company in another country.
• Your Indian company provides services (like software development) to your foreign parent company.
• Your Indian company pays a "management fee" or "royalty" to your foreign parent for using its brand or IP.
• Your Indian entity and foreign entity share common directors or have significant mutual interest.

Our Solution: Proactive Transfer Pricing Management

Transfer pricing should not be an afterthought. It requires proactive planning. We help you structure your inter-company agreements and pricing policies to be compliant with the arm's length principle from day one.

Our services include preparing the mandatory transfer pricing study and filing the <a href="/startup-finance-glossary/what-is-form-3ceb">Form 3CEB</a> report with your tax return, ensuring you have the documentation needed to defend your pricing policy during a tax audit.