Tag: Localisation

Process by which a foreign technology, brand, or intangible is adapted to suit a local market, raising questions about whether the local entity creates independent value warranting a reduction in royalty payments. Tax authorities challenge whether full royalties remain arm’s length once local adaptation occurs.

India vs Maruti Suzuki India Ltd., July 2010, High Court, Case No 6876/2008

India vs Maruti Suzuki India Ltd., July 2010, High Court, Case No 6876/2008

Maruti Suzuki India paid royalties to its parent for trademark and technology licences used in manufacturing cars. The Indian tax authority disallowed the trademark royalty and imputed a mark-up for brand promotion activities. The Delhi High Court remanded the case, holding that where trademark use is mandatory under a licence agreement, the foreign parent must compensate the subsidiary for marketing intangibles created, or provide a corresponding discount ... Read more