Addressing a workshop on transfer pricing, Mr Happell said this might become a issue to ponder before any foreign investment is made in India by any multinational. Internationally, transfer pricing has emerged as one of the most complex tax issues facing the corporations and intra-group cross-border transactions are growing rapidly and becoming much more complex in the present globalisation era, said Mr Happell. In order to understand the demand of emerging transfer pricing environment, companies need to understand nuances like arm's length price, associated enterprises and international transactions.

He also said that transfer pricing will become more popular in Asian countries like China, Malaysia, Thailand and Taiwan in the years to come. This is because these countries are moving towards a free economic structure, where wholly-owned subsidiaries are preferred to joint ventures.

Speaking at the occasion, Mr Rathin Datta, managing partner and head, tax and legal services, PwC,India said that the transfer pricing policy, is still in growing stage and therefore, it should be applied as an exception rather than a rule. He also added that although all MNCs have a global transfer pricing policy, it would become necessary for them to incorporate a distinct India-specific transfer pricing study to ensure compliace to Indian rules. As a suggestion to make transfer pricing more assessee-friendly, he suggested that the income tax department in each metro should have competent officers specially trained in transfer pricing policy to take care of the issue with moderation.