The JWG was established to exploit the possibilities of renegotiation of certain provisions of the bilateral agreement thirty years old and is characterized by a system of elimination of double taxation.
Indeed, in an order signed by the judge P.K. Balasubramanyan, president, Authority for Advanced Rules (AAR) indicates that the Indian tax law to tax the transfer pricing of multinational entity to another is taxable opposed to capital gains that are not part of a convention banning the regime of double taxation.
The AAR is a quasi-judicial mechanism allowing India to issue a directive in a scenario likely to occur in the future. It saves time. Once the directive is issued, it automatically engages stakeholders until it is contested before a High Court of Justice.
The intervention was sought by AAR Castleton Investment Limited, hosted at the headquarters of DTO Ltd, 10th level, Raffles Tower, 19 Cybercity, Ebene.
This directive AAR is important for several reasons. So far, the AAR has brought luck to companies based in Mauritius and who sought his opinion to determine if they qualify for exemption from tax on capital gains.
As far as capital gains on transfer pricing is a possibility of considerable rents, after all legal operators to operate in the financial services sector. Transfer occurs when an entity that is part of a multinational decides to transfer money to another, which is another territory. In other words, significant amounts can change hands using the framework transfers.