COVID-19: Need for adjusting cost base and revising mark-up for services of captive service providers September 5, 2020
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We are pleased to share with you the copy of our latest edition of “TaxBuzz”.
In the aftermath of COVID-19, benchmarking of profit margins of the low risk captive service providers from Transfer Pricing perspective would be a complex exercise, as the combined profitability in the value chain is shrinking and the associated enterprise would be seeking to renegotiate the remuneration paid as a cost plus mark-up, to reflect the margins in the current economic scenario.
Our “TaxBuzz” seeks to address the issue as to whether Nil or lower cost plus mark-up may be recovered by low risk captive service providers and whether the cost base of such service providers may be adjusted to iron out the effect of extra-ordinary circumstances due to COVID-19.
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