How to Treat in Transfer Pricing Requirement?
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Date
2016
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Department of Accountancy, University of Kelaniya
Abstract
XYZ (Pvt) Ltd is a fully owned subsidiary of the PQR Holdings PLC. Its main
business operation is providing telecommunication services and solution. XYZ
(Pvt) Ltd has faced to a credit shortage issue as it provide services on credit
basis.
XYZ (Pvt) Ltd had two alternatives to funding cash requirement to its
telecommunication projects, alternatives are by taking Bank loan with average
market rate or funding through its parent company with reduced or no interest.
XYZ (Pvt) Ltd with influence of PQR Holdings PLC will accepting second
alterative which obtain tax saving in group perspective. In this scenario XYZ
(Pvt) Ltd will be able to continue its business operations and subsequent
settlement of loan will be taken place with zero or reduced interest.
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Citation
Keerthirathne, D.G.I.C. & Bandara, R.M.S. 2016. How to Treat in Transfer Pricing Requirement?. Case Studies in Accounting “Bridging the Gap”, 03: pp. 67-68. Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka.