Thursday, 6 November 2014

What are the documents required to be maintained by a company while executing an international transaction?



What are the documents required to be maintained by a company while executing an international transaction?

The following documents have to be maintained when a company is involved in an international transaction.

The details of the ownership of the person with respect to the company. These include the ownership structure, the details of the shares, and information on ownerships held by any other company on it.

A detailed profile of the foreign group to which the assessed company is associated with for the international transactions. The details such as name, address, country where tax returns are filed, and the legal status, etc., have to be furnished about the multinational group.

A detailed description of the business activities of both the assessed person and the associated group of companies with whom the former has been involved in international transaction.

The details of the international transaction, such as the nature of the transaction, details of the property or services transferred, the terms contained in the transaction, and the amount and value of each transaction.

The details of the functions carried out by such a transaction, the details of the risks involved and the value of the assets used or to be used by the assessed or the associated company that is involved in such a transaction.
The details of the records collected for the entire business or a particular division of the business during the period of the company’s business activity in which the foreign transaction has been involved. These include reports such as the estimates made on various market trends, forecasts about the market, budget analysis or any other such finance-related reports prepared by the company.

The details of the uncontrolled transactions, if any, that has taken place with a third party during the period of the international transaction. The nature and the terms and conditions of such transaction have to be mentioned as they play an important role in deciding the value of the international transaction.

The details of the analysis conducted in order to assess the impact of the uncontrolled transaction on the international transaction concerned.

The details of the various methods considered and the most appropriate method adopted in deciding the arm’s length price with respect to an international transaction. The details should also include the details on why the particular method was adopted and how it was implemented successfully in order to decide the arm’s length price and why other methods are rejected / not suitable to the entity, have to be observed.

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