Tax Ruling for Netflix India Boosts View for Digital Sector

Netflix’s win in an India tax dispute signals that some international digital businesses may get friendlier treatment in the country than tax authorities would like.

The ruling rejected the Indian tax department’s characterization of Netflix India’s business, and deleted an adjustment of 4.45 billion rupees ($50 million) to the arms-length price, or transfer price, of a transaction between the company and its overseas affiliate.

It also expressed concern about “the increasing tendency of transfer-pricing officers to conflate technological presence with economic ownership.”

The order, by the Mumbai bench of the Income Tax Appellate ...