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Transfer Pricing Agreement

Transfer Pricing Agreement Template for India

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Key Requirements PROMPT example:

Transfer Pricing Agreement

"I need a Transfer Pricing Agreement between our Indian IT services subsidiary and UK parent company, covering software development services and including safe harbor provisions, to be effective from January 2025."

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Document background
A Transfer Pricing Agreement is essential for multinational enterprises operating in India to document and regulate their inter-company pricing arrangements. This agreement type is particularly crucial given India's stringent transfer pricing regulations and documentation requirements under the Income Tax Act, 1961. The document is typically used when related entities engage in cross-border transactions and need to establish clear, compliant pricing mechanisms that satisfy the arm's length principle. It includes comprehensive details about pricing methodologies, compliance requirements, documentation obligations, and risk allocation. The agreement helps companies demonstrate compliance with Indian transfer pricing regulations to tax authorities and provides a framework for consistent application of transfer pricing policies across the organization. It's particularly important given the Indian tax authorities' increased focus on transfer pricing audits and the significant penalties for non-compliance.
Suggested Sections

1. Parties: Identification of the related entities entering into the agreement, including their registered addresses and company details

2. Background: Context of the agreement, relationship between parties, and nature of international transactions

3. Definitions: Definitions of key terms including Arm's Length Price, Transfer Pricing Methods, Associated Enterprise, and other relevant terms

4. Scope of Agreement: Details of transactions covered, products/services involved, and territorial scope

5. Transfer Pricing Methodology: Agreed method(s) for determining transfer prices and justification for selection

6. Pricing Terms: Specific pricing formulas, calculations, and adjustments

7. Documentation Requirements: Requirements for maintaining documentation as per Section 92D and Rule 10D

8. Compliance Obligations: Parties' obligations to ensure compliance with Indian transfer pricing regulations

9. Term and Termination: Duration of agreement and conditions for termination

10. Representations and Warranties: Standard representations regarding authority, compliance, and accuracy of information

11. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

Optional Sections

1. Advance Pricing Agreement Reference: Include if the agreement is pursuant to an APA with tax authorities

2. Safe Harbor Provisions: Include if opting for safe harbor rules under Section 92CB

3. Benchmark Analysis Process: Include if parties agree to periodic benchmark analysis

4. Dispute Resolution: Include detailed dispute resolution mechanisms if standard jurisdiction clause is insufficient

5. Force Majeure: Include if parties want specific provisions for handling unforeseen circumstances

6. Review and Adjustment Mechanism: Include if parties want periodic review of pricing methodology

7. Confidentiality: Include if specific confidentiality provisions beyond standard terms are required

Suggested Schedules

1. Schedule 1 - Covered Transactions: Detailed list and description of all international transactions covered

2. Schedule 2 - Pricing Methodology Details: Detailed calculations, formulas, and examples of pricing methodology application

3. Schedule 3 - Documentation Format: Templates and formats for required documentation

4. Schedule 4 - Comparable Companies: List of comparable companies used for benchmark analysis

5. Appendix A - Financial Models: Detailed financial models used for price calculation

6. Appendix B - Compliance Checklist: Checklist of compliance requirements and deadlines

7. Appendix C - Supporting Documents: Copies of relevant regulatory approvals or references

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Arm's Length Price
Associated Enterprise
Advance Pricing Agreement
Bench Marking Analysis
Comparable Uncontrolled Price
Comparable Uncontrolled Transaction
Cost Plus Method
Controlled Transaction
Documentation Requirements
Effective Date
Financial Year
Group
International Transaction
Indian GAAP
Most Appropriate Method
Operating Margin
Parent Company
Profit Level Indicator
Profit Split Method
Related Party
Resale Price Method
Safe Harbor Rules
Services
Subsidiary
Tax Authority
Transfer Price
Transfer Pricing Method
Transfer Pricing Officer
Transactional Net Margin Method
Working Capital Adjustment
Tested Party
Prescribed Documentation
Range
Quartile
Comparable Companies
Control
Enterprise
Material Change
Specified Domestic Transaction
Tax Year
Clauses
Parties
Recitals
Definitions
Scope
Transfer Pricing Methodology
Pricing Terms
Documentation Requirements
Compliance
Information Exchange
Record Keeping
Audit Rights
Confidentiality
Term and Duration
Termination
Force Majeure
Representations and Warranties
Indemnification
Dispute Resolution
Governing Law
Jurisdiction
Amendment
Notices
Assignment
Severability
Entire Agreement
Counterparts
Review and Adjustment
Risk Allocation
Reporting Requirements
Tax Compliance
Competition Law Compliance
Data Protection
Intellectual Property
Cost Sharing
Performance Standards
Quality Control
Service Levels
Currency and Payment
Benchmark Analysis
Safe Harbor Provisions
Advance Pricing Agreement Compliance
Relevant Industries

Information Technology

Pharmaceutical

Manufacturing

Automotive

Consumer Goods

Financial Services

Telecommunications

Professional Services

Energy and Resources

Healthcare

E-commerce

Research and Development

Relevant Teams

Finance

Tax

Legal

Compliance

Treasury

International Business

Risk Management

Corporate Planning

Financial Control

Transfer Pricing

Relevant Roles

Chief Financial Officer

Transfer Pricing Manager

International Tax Director

Tax Compliance Manager

Finance Director

Legal Counsel

Corporate Controller

Group Financial Controller

Head of Tax

Pricing Analyst

Financial Planning Manager

Treasury Manager

International Business Manager

Compliance Officer

Risk Manager

Industries
Section 92 to 92F of Income Tax Act, 1961: Primary legislation governing transfer pricing in India, defining associated enterprises, international transactions, and computation of arm's length price
Rule 10A to 10E of Income Tax Rules, 1962: Detailed rules for transfer pricing documentation, methods for computing arm's length price, and maintaining information and documents
Section 92CC and 92CD of Income Tax Act, 1961: Provisions relating to Advance Pricing Agreements (APA) and effect of APA
OECD Transfer Pricing Guidelines: While not binding, these guidelines are considered as supplementary reference in India for international best practices
Circular No. 14 of 2001: CBDT circular providing guidance on transfer pricing legislation and administrative procedures
Section 271(1)(c) and 271AA of Income Tax Act: Penalty provisions for concealment of income and failure to maintain transfer pricing documentation
Safe Harbor Rules under Section 92CB: Rules providing circumstances where income tax authorities will accept the transfer price declared by the assessee
Rule 10AB of Income Tax Rules: Specific rules regarding the procedure for Advance Pricing Agreements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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