Truecaller Warns of $91 Million India Tax Claim Linked to Transfer Pricing
India may impose a transfer pricing audit for numerous financial years, with Truecaller potentially facing a tax demand of up to $90.85 million. The Swedish Tax Authority has already made its first formal decision for the 2022/23 fiscal year.
Truecaller, a Swedish telecom company, announced on October 19 that it anticipated an audit of its transfer pricing in India will lead to a tax bill from the Indian government totalling approximately 900 million Swedish crowns ($90.85 million), including interest. As per the Income Tax website in India, a transfer price is the real amount paid when linked organisations interact with one another.
According to the caller ID app, India has sent the first official transfer pricing order for the fiscal year of 2022/23. It will be followed by a formal tax demand. According to Truecaller, the 270 million crowns in additional tax and interest would be proposed as a result of the order, which concerns the distribution of revenue among Truecaller firms.
Truecaller Disagrees with Govt’s Decision & Vice-Versa
The business has projected a total liability of approximately 900 million crowns for the years 2018–2019 through 2023–24. Nevertheless, it anticipates recouping approximately 350 million crowns in Sweden through double-taxation relief, thereby increasing its net possible exposure to approximately 550 million crowns. As its transfer pricing policy adheres to arm's-length principles that have been confirmed by external experts, the company stated that Truecaller strongly reiterates that all claims are untrue.
Additionally, it stated that it would pursue an appeal with the relevant Indian tax tribunals and courts. Revenue allocation by Truecaller firms has been called into doubt by Indian tax authorities. Accordingly, the first official transfer pricing order for the fiscal year of 2022–23 has been issued by the government. An official tax demand is anticipated to be issued subsequent to the order's proposed adjustment of 270 million Swedish crowns in additional tax and interest.
How Matter Got Triggered?
Roughly three-quarters of Truecaller's revenue comes from the Indian market, making it the biggest market overall. The most recent disagreement arises after Indian tax authorities, according to Truecaller at the time, conducted what they deemed as a regular examination of the company's operations in India approximately two years ago. Aside from routine tax audits, the business said it was complying completely with authorities.
In recent years, tax officials in India have been cracking down on international corporations' use of complex corporate structures to hide their true profit distribution practices, and this case is only the latest in a long line of such disputes. The initial formal so-called transfer pricing decision from the Indian tax authorities falls within the range that the firm had anticipated, according to Odd Bolin, CFO of Truecaller.
The full amount of the bank guarantee that it anticipates being required to supply, up until the bilateral process resolves this transfer pricing issue. "This summer's financing, along with our current finances, should allow us to comfortably cope." Bolin elaborated by saying that the company's operations and capacity to invest in revenue-driving initiatives will be unaffected.
