The Hindu Business Line : OECD urges India to adopt better audit selection techniques

New Delhi, July 3 India could be more selective in the multinational enterprises it audits under its transfer pricing regime, the OECD’s Deputy Director-General, Mr Pier Carlo Padoan, has suggested.

The need for India to adopt better audit selection techniques was emphasised by OECD officials at the two-day international tax conference, co-hosted by the Finance Ministry, ADB and OECD.

Mr Padoan told a press conference that the country could also find ways of reducing the time it takes to close cases and provide officials with more scope to negotiate settlements so that fewer cases end up in the courts.

“Multinational enterprises want more certainty and transparency. Advance pricing agreement may be an option to look at. India may also want to engage more with the OECD as we revise our 1995 Transfer pricing guidelines,” he said.

Meanwhile, sources in the Finance Ministry said the Revenue Department had made transfer pricing adjustments in about 27 per cent of the cases that were taken up for transfer pricing audit. India’s transfer pricing regime is five years old.

On application of tax treaties, Mr Padoan said that business had, at the conference over the last two days, been looking for greater consistency and transparency in the application of treaties and more effective dispute resolution.

For India to continue its emergence as a major world economy, he underscored the need to develop a tax system that promoted inward and outward investment and competitiveness of India-based multinationals.

On Goods and Services Tax (GST), Mr K. Mohandas, Additional Secretary (Revenue) in the Finance Ministry, said that Government was keen to introduce GST by 2010 and that an action plan was being developed for this purpose.

The two-day international tax conference had about 300 participants including 48 foreign participants from nine countries.