I am selling to an Associated Enterprise ( my distributor in USA )a newly launched Product. My distributor wants me to sell them at a dicsounted price, ie., i am recovering only the variable cost + some portion of overheads. and no profit at all.
What type of Transfer Pricing issues are going to arise in such transaction?????
URGENT
Seller Faces Transfer Pricing Scrutiny for Discounted Sales to Associated Enterprise; Importance of Documentation Emphasized. A discussion on transfer pricing issues arises when a seller plans to sell a newly launched product to an associated enterprise (AE) in the USA at a discounted price, covering only variable costs and some overheads, without profit. Concerns are raised about potential scrutiny by the Transfer Pricing Officer (TPO) due to reduced profitability. It is advised that the seller should charge the AE the same rate as non-AE transactions or use market rates if the product is not sold to others. Maintaining proper documentation is crucial, especially for transactions over Rs. 1 crore. (AI Summary)
TaxTMI 
TaxTMI 
