India’s Supreme Court found that Morgan Stanley did not have to pay tax in that country for income earned from its business process outsourcing unit, giving multinational companies a lift in their outsourcing arrangements.

The court found that the captive unit, Morgan Stanley Advantage Services Ltd., did not qualify as a “permanent establishment” of the parent company as long as its transactions with the parent company occurred at market prices and the unit was only carrying out back-office operations.

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