Client Industry: Entertainment Industry
Background :
The wholly owned subsidiary in India of a Multinational Company was engaged in providing Marketing support services, after Sale support services and Software Development services to its parent entity. The parent entity was in business of selling and marketing set top boxes. The client approached us for our professional advice on whether the services given to the parent entity would lead to creation of PE in India. In case, it leads to creation of PE how the same can be mitigated.
Our Approach :
- We carried out a detailed discussion with the management to understand the transaction and objective behind the assignment
- We reviewed the existing intercompany agreements for each service to understand the scope, terms and conditions of the agreement
- Based on our understanding of the agreement and transactions, we carried out a detailed analysis to identify any inherent PE risk in such agreements as per the applicable regulations and new definition of Agency PE
- We also suggested ways to mitigate any possible exposure as per the provisions of law
Outcome/Impact :
We were successful in helping the client to know the inherent risk of PE in current intercompany agreement and the same can be mitigated within the boundaries of law.