SUSTAINABILITY CHALLENGES FACED BY SMES FROM TRANSFER PRICING LAWS
Entrepreneurial zeal is a backbone of any emerging economy. Most of the geographies of the world have gone at lengths to preserve and promote their respective industries, for the overall economic development. The SME sector is one such crucial aspect, which the world economies are interested in. India, in particular, looks at SMEs as an important way for building and strengthening the nation (Ministry of Micro, Small and Medium Enterprises, 2019). Everyone acknowledges and dreams of minting the strides in technological and industrial advancements that the SME sector brings up (Mcintyre, 1994).
In order to conduct and flourish their businesses, the SMEs have to accept, embrace and sometimes overcome the administrative and legal framework of a country. One such vital aspect which requires an iron clad planning from these entities is the taxation regime. Although small and/or medium in nature (as their names suggest) e-commerce specifically, and exuberant conveyance facilities generally, have allowed SMEs to dream big (Rawlings, 2017; Drahos, 2017). This brings up a possibility of cross border transactions, thus triggering the Transfer Pricing provisions, of the respective countries.
The Transfer Pricing provisions have been enacted to allow a particular country to earn its dues rightfully, as well as to not burden an entity to pay taxes twice (with a cascading effect). This being said, the strength of these laws is still an open-ended predicament, since, a rift between these laws is witnessed by many in the developed West and the developing & least developed East (Medium, 2019). Such a rift creates a conundrum about whether indeed it is possible for SMEs to sustain in the globalized world markets, let alone to grow into prosperity (EY, 2019).
This paper highlights the transfer pricing related legal challenges that the SMEs face and, deals with the possibility for SMEs to co-exist with them, leading to sustenance