India has approved (on 5 November) a proposal to remove the current cap on royalties paid for overseas technology transfers.
The change will permit royalties, lump sum fees for technology transfers and payments for the use of a trademark or brand name to be made without restriction. India currently imposes a $2m cap on one-off payments for foreign technology transfers, and a cap of 5% of domestic sales and 8% of export sales for royalties paid without specific approval. There are also caps for royalties paid for the use of trademarks and brand names – 1% of domestic sales and 2% of export sales.
Removal of the cap means enable foreign companies should re-consider whether a higher royalty payment from their licensees in India would be appropriate – bearing in mind transfer pricing rules, as usual, where connected enterprises are involved.
--
Related posts:
- India: royalties – oh no, they aren’t; oh yes, they are
- India: satellite use fees are royalties
- India: Transfer pricing and trademarks
- India: clear as …?
- China: royalties and tax treaties
Tags: cap, india, royalties, technology transfer