In an unannounced visit on November 6, the Indian Income Tax Department conducted surveys at Truecaller’s offices in Mumbai and Gurugram, investigating potential transfer pricing violations by the Swedish caller identification company. Transfer pricing regulations govern how companies price transactions between divisions in different countries and are scrutinized to prevent tax avoidance.
Truecaller confirmed the visit and emphasized that such inspections are not uncommon for multinational firms operating in India. The company stated it is fully cooperating with the authorities and has “always paid all taxes due in India and all regions where it operates.” Truecaller, listed publicly in Sweden, highlighted its adherence to international tax standards, stating its transfer pricing policy is consistent with the “arm’s length” principle.
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This principle is widely accepted and aims to ensure fair and appropriate tax allocation across countries where companies operate. Truecaller also noted that its transfer pricing practices are regularly reviewed to ensure compliance with both Indian and Swedish tax regulations.
The Income Tax Department’s interest in Truecaller’s transfer pricing practices likely arose from past concerns raised by financial watchdogs. In 2022, the investigative group Viceroy Research released a report alleging that Truecaller had failed to adhere to transfer pricing principles, avoiding higher tax rates in India by funneling revenue through its Swedish entity.
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Despite India being Truecaller’s largest market contributing approximately 80% of its revenue and over 70% of its daily active users as of 2021 the company reported a loss in India that year while posting significant consolidated profits. The Viceroy’s report submitted that by billing customers primarily through Sweden, Truecaller may have reduced its tax liability in India.
For the period between July and September 2024, Truecaller accrued taxes totaling SEK 40.3 million (about $3.73 million), though it remains unclear how this amount was allocated between Indian and Swedish tax authorities.
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The recent visit signals the Indian government’s increased focus on enforcing tax compliance among multinational companies, particularly concerning transfer pricing practices. By ensuring that revenue generated in India is appropriately taxed, the authorities aim to prevent potential tax base erosion and profit shifting. Truecaller, while cooperating with the ongoing investigation, has clarified its commitment to transparency and compliance with tax regulations in all markets where it operates.
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