There is co. in india. It wants to open a US Branch for mkting purpose and getting new clients from us and indian co. will make payment for its marketing services. AS now there is no non resident so want to confirm whether Tp will be applicable now?
13 April 2012
No. A head office and its branch are one and the same. Therefore can’t be treated as AE and TPR shall not apply. However if the branch is treated as a permanent establishment in any particular country for tax purposes, then TPR shall be applicable.
18 April 2012
One of the parties to an international transaction should be a NR. Transactions between a resident enterprise and its foreign branches shall not be considered as a international transaction because such branch does not carry any separate legal existence. As a result TPR shall not apply.
However the definition of enterprise is broad and includes a PE even though a PE is not a separate legal entity. Consequently, transaction between a foreign enterprise and its PE, for example between the head office abroad and a branch in India, are also subject to these transfer-pricing regulations. Also the regulations would apply to transactions between foreign enterprise and a PE of another foreign enterprise.
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