Secondary adjustment provision in Budget FY18 could hit cash flow, dividend payout A new provision for secondary adjustment in transfer pricing, announced in the Union Budget for 201718, is likely to affect the cash flow of multinational corporations (MNCs) and the dividend distribution tax paid by their Indian subsidiaries. The provision has also sparked worry on Minimum Alternate Tax (MAT) and service tax payable by the subsidiaries, as well as retrospective implementation from 201314. Experts claim the provision is in line with the norms of the Organisation for Economic Cooperation and Development (OECD) —an international economic organisation with 35 member nations —but its wording is giving rise to apprehension. Transfer pricing is the setting of the price of goods or services sold byasubsidiary to the parent. Aprimary adjustment is made, byatax administration, toacompany´s taxable profits on transactions with an associated enterprise inasecondary jurisdiction. At presen