Truecaller expects Indian tax authorities to seek a $90.85 million claim over transfer pricing, but the company disputes the assessment and plans legal appeals.
Swedish caller identification company Truecaller expects Indian tax authorities to raise a tax demand of approximately 900 million Swedish kronor, or $90.85 million, including interest, following a transfer pricing audit.
The company disclosed on Monday that it had received its first formal transfer pricing order from India for the 2022/23 financial year. A formal tax demand is expected to follow the order.
The dispute concerns the allocation of revenue between Truecaller entities and the tax treatment of transactions between related companies. Truecaller has rejected the proposed claims, stating that its transfer pricing policy complies with the arm’s-length principle. The company has also indicated that it intends to challenge the order through India's tax tribunals and courts.
Truecaller said the Indian tax authorities had issued a formal transfer pricing order relating to the financial year 2022/23.
According to the company, the order proposes an adjustment involving additional tax and interest amounting to 270 million Swedish kronor. This is the first formal order in the matter, and a separate tax demand is expected to be issued subsequently.
The order relates to how revenue is allocated among Truecaller’s entities operating across different jurisdictions. Tax authorities may examine such arrangements to determine whether transactions between related companies reflect appropriate pricing under applicable tax rules.
The company expects the issue to extend beyond the latest assessment, with potential liabilities relating to several financial years.
Truecaller estimates that its total potential liability in India could reach approximately 900 million Swedish kronor, equivalent to around $90.85 million, including interest.
The estimate covers the financial years 2018/19 through 2023/24. It reflects the company’s expectation of the possible cumulative financial impact of the transfer pricing assessments.
However, the amount remains a potential liability rather than a confirmed final tax payment. The formal demand following the latest order and any subsequent legal proceedings could determine the final outcome.
The development places a significant potential financial obligation before the Swedish technology company as it prepares to contest the assessment.
Although Truecaller expects the Indian tax claim to reach around 900 million Swedish kronor, it anticipates receiving approximately 350 million kronor in tax relief in Sweden under double-taxation provisions.
If the expected relief is realised, the company estimates that its net potential exposure would fall to around 550 million Swedish kronor.
This distinction is important because the gross amount potentially claimed in India is not necessarily the same as the ultimate financial burden for the company.
The estimated relief remains subject to the applicable rules and the outcome of the relevant tax processes. The final net impact will depend on how the Indian assessment and the anticipated Swedish tax relief are resolved.
Transfer pricing refers to the prices charged when related entities within the same corporate group conduct transactions with one another. These transactions can involve services, intellectual property, goods or other business arrangements.
For example, a multinational company may have separate entities handling technology development, marketing and regional operations. The prices charged between those entities can affect how profits are allocated across countries.
Tax authorities examine such transactions to assess whether the pricing follows the arm’s-length principle. This principle generally requires related-party transactions to be priced in a manner comparable to transactions between independent businesses under similar circumstances.
In Truecaller’s case, the dispute concerns revenue allocation between its entities. The company maintains that its pricing approach follows the required principle and has been reviewed by external experts.
Truecaller has strongly disputed the proposed tax adjustments, maintaining that its transfer pricing policy complies with the arm’s-length principle.
The company said its approach has been verified by external experts and described the claims as unfounded.
Truecaller has also confirmed that it plans to appeal the order through Indian tax tribunals and courts. The legal challenge will provide an opportunity for the company to contest the assessment and present its arguments regarding the revenue allocation arrangements.
The outcome of these proceedings could influence the final tax liability and determine whether the proposed adjustments are upheld, revised or overturned.
Until the dispute is resolved, the estimated amount should be treated as a potential exposure rather than a final, settled obligation.
The potential tax claim highlights the importance of transfer pricing compliance for multinational companies operating in India.
Businesses with operations across multiple jurisdictions must manage intercompany transactions in line with the tax rules of the countries where they operate. Disagreements over revenue allocation can lead to assessments, additional tax demands and lengthy legal proceedings.
For Truecaller, the financial impact will depend on the final assessment, the outcome of its planned appeals and whether the anticipated double-taxation relief in Sweden is granted.
The case also illustrates how cross-border tax disputes can create uncertainty for companies even when they maintain that their arrangements comply with applicable principles.
Conclusion
Truecaller expects a potential tax claim of approximately $90.85 million from Indian authorities following a transfer pricing audit covering multiple financial years. The company disputes the assessment and plans to challenge it through the Indian tax system. Expected relief in Sweden could reduce its estimated net exposure, although the final financial impact remains uncertain.