Intra Group Services: Need for a Uniform Transfer Pricing Regime

Intragroup services form one of the trickiest areas in transfer pricing regulation owing to the internal and routine nature of these activities. Instances of false invoicing and tax evasion are rampant as national tax authorities scramble to detect malpractices. Apart from the transfer pricing challenges inherent in intragroup services, external problems arise in the form of inconsistencies in domestic taxation regimes. The lack of adequate coordination among national tax regulators further aggravates the problem. This research paper seeks to delve into this issue and stress the compelling need for a uniform global approach. The introduction is followed by a brief analysis of the existing legal framework under the Organization for Economic Cooperation and Development (OECD). The subsequent section will discuss major Indian case laws to understand the judicial approach towards transfer pricing adjustments made to intragroup service transactions. The conclusion will highlight the shortcomings and inconsistencies in the existing regulatory framework and emphasize the need for a uniform transnational approach.