Abstract
Outsourcing of operations from high cost countries to low cost countries has given birth to the location savings concept. Overtime, a related broader concept of location specific advantages (LSA) has emerged, the exploitation of which gives rise to location rents. The determination and allocation of location savings/LSA and rents is a key TP issue - especially in developing countries. This article outlines the approach expressed on the aforementioned issue, in the US TP regulations (and court practise), OECD TP Guidelines and the UN TP Manual. Thereafter, the approach of the Indian tax administration and Courts is scrutinized in light of the international guidance. Finally, the authors provide their view on the road ahead for determination and allocation of location savings.
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