Evolving outlook of tax authorities towards marketing
intangibles
The issue on excessive advertisement and marketing has gradually
evolved over the last decade in India and gained prominence due to
India's unique market specific characteristics, viz location
advantage, huge market base, etc.
The Indian subcontinent has witnessed substantial Advertising,
Marketing and Promotional (AMP) activities being undertaken by the
Indian subsidiaries of MNE groups. Over the years, Transfer Pricing
Officers (TPOs) have made adjustments on such excess AMP spend, on
the premise that such expenses were being incurred by Indian
taxpayers on behalf of foreign Associated Enterprises (AE), for
promoting the brands/trademarks legally owned by foreign AEs and
for creating/developing marketing intangibles. Generally, the tax
authorities over these years have been taking a position that:
