Tax and transfer pricing essentials for captives
Not tax advice. Global Capability Centers usually operate on intercompany arrangements that must make sense to tax authorities in India and in the parent jurisdiction.
Operators should not invent this alone. You should understand enough to ask good questions.
Questions worth asking advisors early
- What transfer pricing method fits our functions and risks?
- How do we document people functions as mandates grow beyond routine support?
- What changes when we move from EOR to our own entity?
- How do incentives interact with taxable income and substance expectations?
Operator hygiene
- Keep functional reality aligned with the paperwork as ownership grows.
- Do not let informal “HQ says so” bypass intercompany agreements.
- Revisit the model when the center takes on IP or entrepreneurial risk.
30 / 60 / 90
- 30: Advisor engaged; current model sketched.
- 60: Intercompany and documentation plan for year one.
- 90: Operating rhythm that matches the filed story.
Takeaway
Tax posture follows substance.
If India owns more, expect the documentation conversation to deepen. Plan for it.