Amazon, Apple, And Google Under Scanner Over Transfer Pricing: Report
The income-tax department is reportedly investigating Apple, Google, and Amazon regarding potential tax non-payments. The Economic Times reported that the income-tax department has sought detailed explanations from these tech firms on their transfer pricing practices. The report also stated that this is in connection with a probe that was initiated in 2021.
The ET report also says that the I-T Department may raise a tax demand of over Rs 5,000 crore. The authorities have also rejected many of the justifications given by these tech giants. Apple India Pvt Ltd, Amazon Seller Services India Pvt Ltd, and Google India Digital Services Pvt Ltd are the companies involved in this serious matter. The current investigation is to the methodology followed in transfer pricing adjustments.
Transfer pricing, abbreviated as TP, refers to the pricing of commodities, services, or intangible assets moved between organizations within the same multinational company group. To prevent potential tax concerns and to maintain fair business practices, firms are required to comply with transfer pricing legislation in the countries where they are operating. As per the report, the I-T Department is investigating transactions to advertising, royalties, trading, software development, and marketing services. The probe focuses mainly on transactions categorized as “international transactions” by the tax authorities. However, the tech giants dispute this interpretation.
As per the ET report, the tax investigation on Apple is in connection with the purchase of completed goods from original equipment manufacturers and subsequent domestic sales. In the case of Google, it is to the reporting of specific transactions. Amazon is under scanner for the classification of delivery charges.
