Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: cpt :: form 3cd :: VAT Audit :: ACCOUNTING STANDARDS :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: list of goods taxed at 4% :: empanelment :: VAT RATES :: due date for vat payment :: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4%
 
 
« News Headlines »
 How to link your Aadhaar and PAN details to file income-tax returns
 How to calculate capital gains tax on property sold at less than stamp value?
 Return Filing - Under GST, this is how you will file tax returns from July 1
 Income tax filing FAQs part 1
 Filing Income Tax Returns? Things To Keep In Mind As Deadline Approaches
 Filing of online return for 4th quarter of 2016-17- extension of period thereof.
 New tax accounting standards may reduce leeway for infrastructure companies
 GST – CONCEPT & STATUS – As on 01st May, 2017
 Govt extends VAT deadline, relief for developers
 Income Tax Appellate Tribunal Rules, 2017
 Got your Form 16? You should file income tax returns early to enjoy benefits

Cross-border deals under I-T scanner
June, 12th 2007

Objective of the examination is to study the tax implications of such deals.
 
Income tax authorities are closely examining the tax implications of recent cross-border deals struck by Indian companies.
 
Prominent among the deals is the Tata groups acquisition of a 30 per cent stake in the US-based Glaceau through its UK-based subsidiary, Tata Tea GB. Tata Tea has since agreed to sell the stake to Coca-Cola for around $1.2 billion.
 
Other deals that the tax department is looking into are Telekom Malaysia and Maxiss acquisition of some stake in Chennai-based Aircel, the Hutch Essar-Vodafone deal and the sale of 9.27 per cent stake of Slac Mauritius Holdings in HDFC to Citibank in 2006.
 
The tax department is also closely looking at a host of wholly owned subsidiaries set up by pharmaceutical companies overseas for facilitating cross border acquisitions over the last two-three years.
 
According to sources close to the development, the objective of the examination is to study the tax implications of such structures.
 
It has been observed that most companies with international presence have been routing their overseas acquisitions though their overseas offices or subsidiaries to avoid paying taxes in India.
 
Experts said that this brings up the issue of source and resident taxation. This means that cross-border investment may be taxed where the income is earned (source country ) or where the person who receives it is normally based in (the country of residence).
 
What is taxable in India is transfer of shares in an Indian company. Share transactions do not result in change of legal ownership of an Indian company. Authorities are alleging that there is a transfer of beneficial ownership and therefore capital gains arising out of it should be taxed in India. They are trying to lift the corporate veil, which is fine if there are issues related to corporate laws. Since there is no provision for taxing beneficial ownership, what is being looked at is outside the provision of framework of law, said Mukesh Bhutani, partner, BMR and Associates.
 
Resident taxation is based on the principle that people and firms should contribute towards the well-being of the country where they live, on all their income wherever it comes from.
 
Source taxation is justified by the view that the country that provides the opportunity to generate income should have the right to tax it, a tax expert said.
 
He added that India follows a combination of source and resident taxation. If an Indian company invests outside India in its own name, the branch income is taxable in India.
 
But if an Indian company sets up a subsidiary overseas, which in turn forms subsidiaries for international operations, the income accruing to the first subsidiary is not taxable in India as the income does not come to India.
 
Sources said that even though there are international norms for allocating the rights of taxation, it becomes difficult to demarcate the areas in case of transnational companies.
 
Most of these companies set up a network of intermediary subsidiary companies to manage the financial inflows and bring back inflows to the parent company only when it is required to fund dividends to shareholders.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Contact Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions