MANAGING SUPPLY CHAIN IN CONTEXT OF TRANSFER PRICING

Abstract

It is now very widely known that supply of good and services across the borders by the associated / related companies is subject to the high risk of having disputes with the taxation authorities for abuse of transfer pricing for their international operations which very often may result in litigations. Thus, managing the supply chain when it is related with transfer pricing is extremely important for the smooth conduct of business, This paper in this context, therefore, first explains the relevant concepts of supply chain operations between the associated companies with tax implications, transfer pricing, abuse of transfer pricing, Arm’s Length Pricing, Advance Pricing Agreement, Safe Harbour Rules and then explains how such risk of disputes and litigations may be minimized or even eliminated by adopting a suitable legitimate techniques as per the prescribed guidelines and laws of the national and international institutions enabling MNEs to supply tangible and intangibles to their associate companies without having any issues with the taxation authorities.