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 :: TDS :: VAT RATES :: articles on VAT and GST in India :: form 3cd :: VAT Audit :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: list of goods taxed at 4% :: ACCOUNTING STANDARD
 
 
News Headlines »
 Securities excluded from GST ambit in revised Bill
 GST dilemma: Hope fades for new tax regime
 5nance.com launches tax investment platform
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice

How tax code is executed will make a difference
August, 28th 2009

A proposal in the new direct tax code to treat a foreign firm as a resident Indian entity if part of the management is in India can have a negative impact on foreign investment, says Wilbert H. A. Kannekens, partner and head of the global international tax group at accounting firm KPMG. In an interview last week during a visit to India, he also talked about recent actions taken by the Group of Twenty (G-20) countries on tax havens. Edited excerpts:

How is the new direct tax code perceived by international investors?

Its early to say how it is perceived because it is still brand new. But there is (a) lot of attention from multinational companies because they all have businesses in India or are considering (coming to India). And if I look at the key points from (a) corporate perspective, in the direct tax code it looks like (a) couple of trends that are seen in the international environment, such as reduction of corporate income tax to 25%, thats very much in line with what is happening on the worldwide basis.

At the same time, many exemptions will be abolished. On the one hand, its a good thing because it makes (the tax regime) clearer. On the other hand, its also (a) bad thing because it means an increase in the taxable base on which companies are paying taxes. So that may raise some questions.

Generally, internationally, companies pay tax where they are resident. In the new code there is apparently a section that says that (a) company can be a resident in India if part of the management decisions have been taken here. This can have a negative impact on foreign investments.

Another development in the code is (a) treaty override so it means that in case there is a conflict between Indian domestic law and international law, the domestic law prevails. That will lead to some uncertainty too. I do understand that this is happening in other states too.

In the US, its been there for 30 years, but its not much in line with the international law and standards. Overall, the way it (code) is executedthats going to make (a) difference.

Will reduced tax rates make India a low-tax country for investors?

I think 25% is a very reasonable rate compared with the average world rate. There has been a race to the bottom in terms of (the) corporate tax rate over the last 15 years. I think in (the) European Union the average rate is below 25% now. The United States is higher. There are (a) couple of countries with higher rates such as Japan, the US, and Germany. I think India is on an average now.

What actions have G-20 leaders taken recently on tax havens?

G-20 met last time (a) couple of months ago and have been discussing about tax havens. The main thing they have been discussing was around (the) exchange of information. So which countries do exchange key information and which ones refused to do that. It was around bank secrecy. Now I think what G-20 has achieved is by putting countries on the black list...(A) large number of countries have agreed that they, as of now or in the near future, will adapt to the international standards according to the OECD (Organisation for Economic Co-operation and Development) to exchange information. So I think G-20 has achieved a lot in this respect.

What impact can US President Barack Obamas tax proposals have on outsourcing companies in India?

It wont have a serious impact on outsourcing activities because the key point of Obamas proposal is that profits of multinational companies are going to be taxed in the United States even if profits have been coming from operations outside the US in case they have low tax according to American standards.

Will they take jobs back home?

The way I see is it, (it) is very unlikely. Tax is important but its also important to operate in a country where things are efficient and low-cost. One of the things that could possibly happen (is) that they simply sell those activities to a third party. But they (continue) to use the services. There may be an opportunity even for companies in India to buy those activities.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Application Management Solutions Application Management System Application Management Software System Application Management Development Application Management Software Development

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