Safe-harbour margins to be cut

Weak response to transfer pricing rules set out in 2013

The government is set to slash safe-harbour margins in transfer pricing within a few weeks. 

The margins are used to determine the prices of goods and services rendered by multinationals to their subsidiaries in India.

With margins running up to 30 per cent, the government wants to align them with market rates, which could be well under 20 per cent. Margins decided in tribunals or in advance pricing agreements turn out to be much lower, ranging between 15 per cent and 18 per cent. The safe-harbour rules have evoked a tepid response since these were introduced three-and-a-half years ago. 

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